By: Anthony T. Panebianco, Esq.
Massachusetts General Laws c. 149 §148 states that the “employee discharged from…employment shall be paid in full on the day of his discharge.” The law views this as a strict liability offense, meaning that an employer cannot raise any defense as to why the discharged employee was not paid on the date of termination. For example, a defendant employer cannot attempt to show that they mitigated the damage by paying the discharged employee’s wages after the bringing of a complaint, or even the following day. (See M.G.L. c. 149 §150.)
However, the intent of the employer does come into play when determining what sort of penalty they will face for violating c. 149 §148. Pursuant to c. 149 § 27C, an employer who willfully violates §148 is to face a fine of no more than $25,000 and/or 1 year in prison for a first offense. A subsequent willful offense will draw a fine of up to $50,000 and/or 2 years in prison. If an employer violates §148 without willful intent, said employer will face a fine of no more than $10,000 or 6 months in prison for a first violation. A second violation without willful intent yields a $25,000 fine and/or a year in prison. The Attorney General also has the discretion to issue a written warning or civil citation in lieu of initiating criminal proceedings against the employer.
Violations of the Massachusetts Wage Act (MWA) have been prevalent in Massachusetts courts over the past five years. While the language of the statute may seem straightforward and explicit, there are always questions of interpretation to be sorted out by courts when it comes to new legislation; including breadth of the statute and elements to be proven by the burdened party. With specific regard to the MWA, there have been disputes as to what is to be considered a “wage” under the law, and thus what exactly needs to be paid to a discharged employee right away.
In 2009, the Supreme Judicial Court of Massachusetts (“SJC”) examined this issue in Electronic Data Systems Corp. v. Attorney General. In that case, the Attorney General issued a citation to the plaintiff corporation for failing to compensate an involuntarily terminated employee for unused vacation time. The court held that, pursuant to the MWA, the term “wages” includes holiday or vacation payments that are due to an employee under an oral or written agreement. While the MWA does not require employers to provide paid vacation for their employees, such time that is provided under an employment agreement is to be deemed wages for the purposes of the law. Massachusetts courts have also determined that commissions are to be deemed wages under the MWA. As the Appeals Court of Massachusetts held in Suominen v. Goodman Industrial Equities Management Group, LLC in 2011, the MWA “applies… to the payment of commissions when the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due and payable to such employee.”
To state a claim under the MWA, an employee must prove (1) he was an employee under the statute; (2) the compensation he alleges he is owed is a ‘wage’ under the statute; and (3) the defendant did not pay his wage in a timely manner. Micciche v. N.R.I. Data and Business Under c.149, “Employee” is defined as “any person employed for hire by an employer in any lawful employment.”
Once these elements are proven by a discharged employee, the violations of the MWA by the employer impose strict liability upon the employer. The employer cannot present evidence to the court that it attempted to mitigate its damages with the discharged employee. Massachusetts courts have stressed this point in its decisions in an attempt to make it clear to employers that there is no grey area in these scenarios. Most recently, the SJC held in Dixon v. City of Malden in 2013 that an employer’s failure to pay unpaid wages cannot be mitigated, even by gratuitous payments to the discharged employment. According to the SJC, “a violation of the Wage Act results in damages. It is settled law that the Wage Act ‘impose[s] strict liability on employers…Employers must ‘suffer the consequences’ of violating the statute regardless of intent.” (Emphasis added).
In sum, all violations of Massachusetts Wage laws are subject now to mandatory treble damages regardless of whether or not an employer has acted in good faith. This is in contrast with the federal law under the Fair Labor Standards Act which provide a good faith employer a defense for their actions. Employers can no longer plead ignorance to the law in this regard. Though it may be difficult to generate an accurate final paycheck on the employee’s last day of employment, employers must make every effort to comply. Even if the payment is delayed by only a single day, there is a technical violation of the Wage Act.
Employers need to be aware of the possible pitfalls in terminating an employee. One possible solution is to continue with the termination of the employee and advise them that the termination will be effective on a future date (when the company can more readily produce a paycheck). During said time, the employer can state that the employee, while still technically an employee, need not (or may not) report to work during that intervening period.
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