Muhammad v. Bd. of Education

Davon Muhammad v. Prince George’s County Board of Education, No. 401, September Term, 2019. Opinion by Wells, J. LABOR & EMPLOYMENT — EMPLOYEE STATUS — CONTRACTS Teacher who signed a provisional contract and underwent training in preparation for the school year, but had not started teaching, was an employee of the county board of education. LABOR & EMPLOYMENT — BREACH OF CONTRACT — CONTRACT TERMS Circuit court properly denied teacher’s request to alter or amend judgment where county board of education tendered a check to teacher for settlement of teacher’s breach of contract suit and State and federal withholding taxes were deducted. SETTLEMENT AND RELEASE — CONFIDENTIAL TERMS — COURT’S REVIEW Circuit court did not err in reviewing parties’ settlement agreement, despite a confidentiality clause, where the agreement stated that the court would resolve any dispute concerning the agreement.

Further, absent such language, a court, as a dispassionate legal referee, may determine what should and should not be considered in a given controversy. Circuit Court for Prince George’s County Case No. CAL 16-42259 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 401 September Term, 2019 ______________________________________ DAVON MUHAMMAD v. PRINCE GEORGE’S COUNTY BOARD OF EDUCATION ______________________________________ Kehoe Leahy, Wells, JJ. ______________________________________ Opinion by Wells, J. ______________________________________ Filed: June 1, 2020 Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. Suzanne Johnson 2020-06-04 10:17-04:00 Suzanne C. Johnson, Clerk On November 18, 2016, appellant, Davon Muhammad, filed suit against Prince George’s County Public Schools (“PGCPS”) and appellee, Prince George’s County Board of Education (“the Board”), alleging a breach of the parties’ employment contract. At an April 3, 2018 settlement conference, the Board agreed to pay Muhammad $33,500.00 for full and final settlement of all of Muhammad’s claims which was documented in a written agreement reached during an alternative dispute resolution session.

This agreement was incorporated into a court order and filed with the court clerk. Later, the parties signed a more detailed document entitled, “Settlement Agreement and Release.” Thereafter, the Board sent Muhammad a check for the agreed upon amount, with applicable state and federal tax withholdings withheld, for a total of $20,569.00. Muhammad rejected the check, claiming that the Board had not paid him the full amount agreed upon and moved to vacate the judgment, or in the alternative, to enforce the court’s order. The court denied the request.

Muhammad then filed a motion to alter or amend, which the court also denied. Muhammad appeals from the circuit court’s denial of his motion to vacate and asks the following questions, which we restate verbatim: 1. Did the trial court err by allowing the Board to reduce its settlement payment to Muhammad by $12,951.00 by classifying Muhammad as an employee even though the Board never permitted Muhammad to work as an employee under the teaching contract? 2. Did the trial court err by considering information contained in the confidential release, even though the confidential release states on its face that it “will not be disclosed to any person or entity, except any person or entity that is statutorily required to have such knowledge”?

We hold that the circuit court did not err in finding Muhammad was an employee of the Board at the time of his termination. Further, the amount Muhammad received from the Board to resolve his breach of contract suit was consistent with the terms of the settlement agreement reached. Additionally, although Muhammad insists otherwise, the circuit court properly reviewed the settlement agreement in rendering its decision. We therefore affirm.

BACKGROUND Davon Muhammed began his career with the Prince George’s County Board of Education (“the Board”) in September 2012, working as a substitute teacher and athletic coach. In early July 2016, a human resources representative for Prince George’s County Public Schools (PGCPS) informed Muhammad that he would not be retained for the 2016- 2017 school year. In what seemed to be a reversal of that decision, on July 13, 2016 the principal of Walker Mill Middle School, Dr. Nicole Clifton, offered Muhammad a position as a health education teacher subject to a certification review. One week later, on July 20, 2016, an Instructional Staffing Specialist at PGCPS informed Muhammad that, although he was 42 credits shy of a full certification, he could be provisionally approved for a teaching position if the county supervisor for his subject area provided her recommendation.

The next day, the county health education supervisor approved Muhammad as a health education teacher. On July 27, 2016, Muhammad signed a “Provisional Contract for Conditional or Resident Teacher Certificate Holders,” (“contract”) for the 2016-2017 school year, which 2 was also signed by Kevin M. Maxwell as the Secretary of the Board. The contract expressly stipulated, If any of the conditions of this contract shall be violated by the certified employee named herein, salary already accrued will be forfeited, in the discretion of the Local Board of Education. The Local Board of Education, pursuant to the provisions of § 6-202 of the Education Article of the Annotated Code of Maryland, as amended, may suspend or dismiss the employee at any time, upon the recommendation of the Local Superintendent .... * * * Anything to the contrary notwithstanding, this contract shall terminate if the employee ceases to hold or fails to comply with the requirements for maintaining a teacher’s Conditional or Resident Teacher Certificate.

However, if the employee is provided a Professional Certificate during the school year for which the contract is in effect, the employee’s employment shall continue to be governed by the terms of this contract until its June 30th termination date. [. . .] The contract was to take effect on August 15, 2016. In preparation for the upcoming school year, Muhammad attended three days of training at Dr. Henry A. Wise, Jr. High School on August 8, 9, and 10, 2016; three days of professional development on August 15, 16, and 18; and one day of professional development for health education on August 17. Muhammad finished his last day of professional development on August 18, 2016. The same day, Dr. Clifton informed Muhammad that, in fact, he would not be working with PGCPS in any capacity for the 2016-2017 school year.

Muhammad subsequently sued the Board for breach of contract, seeking $75,000.00 in compensatory damages. At an alternative dispute resolution (“ADR”) meeting held on April 3, 2018, the parties agreed that Muhammad would dismiss his claims against the 3 Board in return for $33,500.00. This ADR agreement was a simple statement that the case was resolved; Muhammad would drop his lawsuit and in return he was to receive the agreed upon sum. The parties signed the ADR agreement and submitted it to the circuit court.

The court docketed Muhammed’s case as settled by agreement. Later, the parties signed a document entitled, “Settlement Agreement and Release” (“settlement agreement”). The first paragraph of the settlement agreement reads: “The Board shall pay and Muhammad accepts, as full and final settlement of the above- referenced litigation, the amount of Thirty Three Thousand Five Hundred Dollars, ($33,500.00), less applicable required State and Federal tax withholding, as full and final settlement of all claims.” (emphasis supplied). It further states that “Muhammad expressly acknowledges that this General Release includes, but is not limited to, matters specifically complained of and involving the litigation[,] his intent to release the Board from any claim relating to his employment from the Board, or arising from the above-referenced litigation . . . .” The parties also incorporated a confidentiality clause, mandating that the terms of the agreement “will not be disclosed to any person or entity, except any person or entity that is statutorily required to have such knowledge.” Muhammad signed the settlement agreement on April 30, 2018.

A representative of the Board signed the document on May 3, 2018. Soon thereafter, the Board sent Muhammad a check in the amount of $20,569.00, reflecting the deduction of $12,931.00 in state and federal tax withholdings. Muhammad, through his attorney, refused to accept the check, and, instead, requested that the Board send a replacement check for $33,500.00 or provide legal authority for the tax 4 withholdings. The Board declined to provide another check, insisting that Muhammad was paid consistent with the agreement.

Muhammad then filed a motion to vacate the settlement agreement and requested the court reset the case on the trial docket, or, in the alternative, order the Board to pay him $33,500.00. On March 19, 2019, the Circuit Court for Prince George’s County held a hearing on Muhammad’s motion to vacate. Muhammad argued that he was never a PGCPS employee because “he was never permitted to work day one as a teacher” despite the parties’ signed employment contract. In response, the Board argued that Internal Revenue Service (IRS) required that it withhold applicable federal and state taxes from settlement proceeds paid on back pay.

The fundamental question for the circuit court was to determine whether, at the time of the contract’s termination, Muhammad was an employee of the Board. At the end of the hearing, the circuit court ruled as follows: Plaintiff was never hired as – or never worked as a teacher. And there was a complaint filed. An amended complaint was then filed, and the amended complaint referenced the situation as to how Mr. Muhammad entered into that employment contract with Prince George’s County Public School System.

That while they are seeking money damages, the reference was for money that would have been received had he [been] permitted to teach and coach for the school year, pay increase, and as well as any and all employment benefits. So the breach of contract was based on [the Board’s] . . . failure to fulfill the employment contract that was entered in. * * * And so on April 3rd, 2018, a settlement agreement and release was signed by both parties. . . . And the plain terms . . . was [sic] that the Board shall pay Muhammad full and final settlement of [$33,500], less applicable required state and federal tax withholding. While it is true that the County cannot just arbitrarily impose taxes, one exception is if a person is an employee.

The underlying basis of this complaint was that the Defendant did not honor the employment contract. It 5 was about Plaintiff being employed as a teacher. It was the monetary award that was sought was based on the salary and income that could have been earned as a teacher and as a coach along with any cost-of-living increase or adjustment that is made. So the court will find that at the time that the parties entered into the agreement, based on the underlying employment contract, that there was an employer-employee relationship between Davon Muhammad and Prince George’s County Public School System.

Additionally, with respect to consummating this settlement agreement and release, which obviously is much more detailed than the few lines that are listed on the order that the parties have reached an agreement and the final agreement that was signed by the Plaintiff and the School, is that this would encompass state and federal taxes. So this was in compliance with what the parties had bargained for. This was in compliance with the settlement agreement that the parties have reached, as Mr. Muhammad was an employee. At that time, the taxes were properly taken out. . . .

With these findings, the court denied Muhammad’s motion to vacate or, in the alternative, enforce the settlement agreement. Muhammed filed a timely appeal. Additional relevant facts will be discussed, as needed. DISCUSSION I. The Circuit Court Properly Found Muhammad Was an Employee of the Board at the Time of Termination Muhammad contends that the circuit court erred in denying his motion to vacate, or in the alternative, to enforce the settlement order when it classified him as an employee of the Board.

Muhammad reasons that because the Board terminated the employment contract before the school year began, in other words before Muhammad began teaching, he was never an employee, and the Board, therefore, illegally withheld payroll taxes. He argues if the court determined that he was the aggrieved party to a contract breach, rather 6 than an employee, then the court would have found that the Board should have paid him exactly $33,500.00. We disagree. We review a trial court’s ruling on a motion to alter or amend a judgment under Maryland Rule 2-534 and on motions to revise judgments under Maryland Rule 2-535 for abuse of discretion.

Harrison-Solomon v. State, 442 Md. 254, 265 (2015); Peay v. Barnett, 236 Md. App. 306, 315-16 (2018). However, our review of a trial court’s interpretation of a contract, including a contract for employment and a settlement agreement, is a question of law and is subject to a de novo standard of review. Myers v. Kayhoe, 391 Md. 188, 198 (2006); Sy-Lene of Washington, Inc. v. Starwood Urban Detail II, LLC, 376 Md. 157, 163 (2003); Grant v. Kahn, 198 Md. App. 421, 428 (2011). Preliminarily, we must determine whether Muhammad was an employee under the parties’ contract, requiring tax withholding on the settlement award pursuant to Internal Revenue Code § 3402(a)(1), 26 U.S.C. §3402 (a)(1).

This section states that “every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with the computational procedures prescribed by the Secretary.” Id. Wages, as determined by the tax code and regulations adopted by the Internal Revenue Service, are defined as “all remuneration for employment,” except those monies expressly excepted. Id. § 3121(a); Wages, 26 C.F.R. § 31.2121 (a)(1). “Remuneration for employment” includes wages irrespective of their designation and also encompasses wages even if the employer-employee relationship no longer exists at the time remuneration is paid. 26 C.F.R. § 3121 (a)-1(c)(i); see Newhouse v. McCormick & Co., Inc., 157 F.3d 582, 585 (8th Cir. 1998). Employment is further defined as “any service, of whatever nature, 7 performed . . . by an employee for the person employing him.” 26 U.S.C. § 3121 (b).

Simply, an employee is “any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee.” Id. at § 3121(d). “The plain language of these statutes indicates the importance of demonstrating an employer-employee relationship in order to label an award as wages for purposes of triggering the withholding requirement.” Newhouse, 157 F.3d at 585 . The Court of Appeals has consistently held that “the question whether an employer- employee relationship exists is one for the [fact-finder] to determine.” Mackall v. Zayre Corp., 293 Md. 221, 230 (1982). An employer-employee relationship exists “when the servant is subject to the master’s control.” Perry v. Asphalt & Concrete Services, Inc., 447 Md. 31, 49 (2016). As such, an employment relationship exists “only when the employer . . . retains the right to direct the manner in which the work or business is done, as well as the result to be accomplished; in other words, not only what must be done but also how it must be done.” Md. Enc.

Employment § 4 (9th ed. 2020) (citing Mackall v. Zayre Corp., supra; Clemons v. E. & O. Bullock, Inc., 250 Md. 586 (1968)). The Court of Appeals has established a five-factor test to determine whether an employer-employee relationship exists: “(1) the power to select and hire the employee, (2) the payment of wages, (3) the power to discharge, (4) the power to control the employee’s conduct, and (5) whether the work is part of the regular business of the