On January 27, 2015, the Maryland Court of Appeals in Cunningham v. Feinberg stated in dicta that the Maryland Wage Payment and Collection Law ("MWPCL") reflects a "strong" public policy of Maryland and urged Maryland courts to hold that future out-of-state employer's choice of law provisions contained in employment agreements be held unenforceable under state law. In doing so, the Maryland Court of Appeals expressly rejected several contrary holdings, including the U.S. Court of Appeals for the Fourth Circuit's decision in Kunda v. C.R. Bard, Inc., 671 F.3d 464, 466 (4th Cir. 2011), in which the court held that the MWPCL did not express fundamental Maryland policy sufficiently enough to trump a party's choice of law contract provisions.
In Cunningham, a former associate brought a claim under the MWPCL against his former law firm employer for unpaid wages, treble damages, and attorney's fees. The employer argued that Virginia law applied to his claims as the employment contract was entered into in Virginia. Notably, the parties' agreement did not include a choice of law provision. Furthermore, the employer argued that the MWPCL did not present a "strong" public policy of Maryland sufficient enough to override the choice of law principles.
The Court of Appeals found that the choice of law doctrine—lex loci contractus—was not implicated in this case because the claim did not involve the validity, enforceability, interpretation, or construction of the employment contract. Specifically, the court found that since there was nothing in the Agreement concerning how to interpret when a wage has been earned (no express terms regarding wages or recovery of unpaid wages), lex loci contractus simply did not apply. Interestingly, the court also rejected the employer's argument that certain implied terms that could be found under Virginia statutory, regulatory, or case law would implicate lex loci contractus, noting "import[ing] another forum's statute into a foreign contract as an implied term and then interpret[ing] the contract in light of that implied term to the exclusion of [Maryland's] laws and remedies" would be an impermissibly broad application of the doctrine, and lex loci contractus should be understood to be applicable to only express terms of a contract.
The Court of Appeals could have ended its decision based on that holding. However, the court chose to address in dicta whether the MWPCL represents a strong public policy that would override a party's choice of law provision. After a lengthy discussion, the court noted: "We can say that, in Maryland, the protections afforded the timely payment of wages owed are quite important, and many of our laws dealing with the subject reflect our strong public policies in that regard."
In light of this decision, employers with Maryland employees should reassess the use of choice of law provisions outside of this jurisdiction to the extent they are contained in agreements waiving state wage and hour claims.
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