Claims for back wages rising

The number of workers fighting to recover back wages has grown amid the recession, including more claims from laid-off corporate executives who say they are owed large sums of severance or performance-based incentives, according to state regulators.

On Tuesday, the Maryland Department of Labor, Licensing and Regulation announced that a Dallas-based information technology company agreed to pay a former Rockville executive $91,000 in severance - one of the largest claims for back wages ever secured by the state agency.


"We cannot tolerate situations in which employees' earned wages are used to protect the bottom line," Maryland Labor Secretary Alexander M. Sanchez said.

The $91,000 payment by Paradigm Solutions Inc. brings the total amount of wages recovered in the first five months of this fiscal year to $362,000, regulators said. That compares to $456,000 collected in all of fiscal 2009, according to the Employment Standards Services, part of the labor department's division of labor and industry.


Officials say the number of claims is rising along with unemployment. In addition to the more typical claims from low-wage earners, the department has seen an increase in claims from high-wage earners, said Askia Johnson, program administrator for Employment Standards Services. Claims can be for severance, commission or other performance-based pay.

"Everyone's claims are peaking, and a new group has been added," Johnson said. "We're now beginning to see highly compensated employees in need of our services. Employers are looking for places to improve the bottom line, and they're looking at employees' earned wages."

Employment Standards is investigating nearly 600 claims of unpaid wages. The average has grown from 273 claims per month in fiscal 2008 to 509 claims per month in fiscal 2009 to 563 claims per month so far this fiscal year. In November, the most recent month for which data is available, the department had 585 open claims under investigation.

Johnson said Paradigm challenged the state's finding, but ended up paying the claim in full. Johnson and a state investigator determined the employer lacked sufficient grounds to extinguish a contractual obligation with Samuel Caldwell, an executive working out of an office in Rockville. His contract was not renewed in July 2008, triggering a contractual severance requirement, state officials said.

An earlier version of this article misstated the number of claims in November. The Baltimore Sun regrets the error.