DK Associates, LLC has recovered millions of dollars in wages, unpaid commissions and bonuses.

In Maryland, companies are required to timely pay employees bonuses or commissions.

The Maryland right to a “bonus” or “commission” arises from three sources: an express written contract, Maryland Wage Payment and Collection statute and/or principles of Maryland contract law.

Right to a Bonus or Commission: Breach of Written Contract

An employee may be entitled to a bonus or commission if the right to receive a bonus or commission is agreed upon, in advance, between the employer and the employee.

• In Maryland, employees and employers have the freedom to contract for bonuses and commissions. Often times, but not always, the rights to a bonus or commission will be outlined in the employee’s contract, offer letter or other written agreement between employer and employee.

• In some circumstances, the right to a bonus or commission is wholly dependent upon what the language of the contract provides.

• For example, if the contract provides that if a Maryland employee does X, then on Y date the Employer will pay C bonus, then the employee is legally entitled to C bonus upon completion of X.

Right to a Maryland Bonus or Commission: The Maryland Wage Payment and Collection Law.

The Maryland Wage Payment and Collection Law (MWPCL) provides another basis to collect for an unpaid “bonus” or “commission.” The Maryland Wage Payment and Collection Law requires employers to timely pay any wages earned. “Wages” have been interpreted by Maryland Courts to include the payment of bonuses and commissions where those bonuses and commissions have been earned.

• The struggle in many cases under the Maryland Wage Payment and Collection Law are whether a Maryland bonus or commission has been “earned.”

• Courts can look to the parties contract (see above) to determine whether the bonus or commission has been earned.

• An alternative approach asks whether the employee has done everything he or she could do to “earn” the bonus such that there is nothing left for the employee to do other than receive the bonus.

This scenario often arises in the context of non-payment of a sales-commission or year-end bonus and/or similar Maryland bonuses and commissions.

• For example, for a year-end bonus – the employee’s contract states that he or she must be employed to receive the year end bonus. However, the employee is terminated in January – the year following the year end bonus.

• The employer then refuses to pay the bonus notwithstanding that the employee has done everything he or she could do to earn the annual bonus.

• In this situation, Maryland courts may find that the bonus has been earned and falls under the Maryland Wage Payment and Collection Law.

Right to a Maryland Bonus or Commission: Sources of Maryland Law

There may be other ways to collect a Maryland unpaid bonus or wage. Theories of contract law such as
• Promissory Estoppel – In Maryland, an employee may recover a bonus or commission where the employee relied on the promise of a bonus or commission to his or her detriment (e.g., forwent other job opportunities, promotions, moved cities, etc.

• Quantum Meruit – in Maryland, an employee may recover a bonus or commission where the employee has given value to the employer such that it would be unjust for the employer to keep the value and not pay the employee an amount relative to the value, i.e., the commission or bonus.

• Unjust Enrichment – in Maryland, similar to Quantum Meruit, unjust enrichment occurs when an employee or contractor confers a benefit on the employer without proper restitution. An argument can be made that, by looking to similar compensation arrangements in the field, the employee or contractor’s restitution is the value of similar commission or bonus arrangements in the field.

• Intentional or Negligent Misrepresentation – In Maryland, intentional or negligent misrepresentation about the value or pay for services can form the basis for an employee to recover a bonus or commission. If the employer has made various intentional or negligent statements about the future payment of a bonus or commission, the employee may have a cause of action under a misrepresentation theory.

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