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Massachusetts Employers Strictly Liable for Late Payments Under Wage Act

On April 4, 2022, the Massachusetts Supreme Judicial Court (SJC) held, in Reuter v. City of Methuen, that the Massachusetts Wage Act, G.L. c. 149, § 148, requires courts to award triple damages to successful plaintiffs paid their wages late—even if their employer paid them in full and regardless of whether the wages were paid one day or one year after they were owed.

Under the Wage Act, employers must pay employees involuntarily separated any earned, unpaid wages on the final day of their employment (employees who voluntarily separate employment must be paid by the next payroll date). The dispute in Reuter centered on the proper measure of damages for a Wage Act violation when the employer paid wages after the statutory deadline but before the employee filed a complaint. Under those facts, the SJC concluded the employer owed treble damages, even though the employer paid the wages in full several weeks after the plaintiff’s termination.

Facts and Procedural History

Plaintiff, a custodian for the city of Methuen’s school department, was convicted of larceny and terminated from her job. On the day of her termination, the city owed plaintiff for accrued vacation, which was paid three weeks later. Under the Wage Act, wages include any vacation payments due an employee under a written or oral agreement. In response to plaintiff’s demand for a trebling of the late wages and attorney’s fees, the city paid trebled interest for the three-week delay. Until the SJC’s decision, lower-court case law held that such interest payments were the proper measure of damages where wages were paid late but a lawsuit had not yet been filed.

The complaint asserted a claim under the Wage Act for failure to pay vacation pay on the day of termination, which claim the employer did not dispute. The trial judge—consistent with prior case law—held that plaintiff was entitled only to treble interest for the three-week delay in receiving her vacation pay, and attorney’s fees. The city appealed from the award of attorneys’ fees, and plaintiff cross-appealed from the determination that she was not entitled to treble lost wages.

The Decision

The question of first impression for the SJC was whether plaintiff was entitled under G.L. c. 149, § 150 to a trebling of late-paid wages or, as the trial judge ordered, trebling of interest only.

The court found that the remedy for late payment of wages provided under G.L. c. 149, § 150 is explicit: the employee “shall be awarded treble damages, as liquidated damages, for any lost wages or other benefits.” Accordingly, the court held that given “the strict time-defined payment policies underlying the Wage Act, and the liquidated damages provision providing for treble damages for ‘lost wages and other benefits,’” the employer in Reuter was “responsible for treble the amount of late wages, not trebled interest.” The plaintiff was also entitled to attorneys’ fees and costs as the prevailing party.

The court recognized “that this rule puts employers in a difficult position when immediately terminating employees for misconduct as in the instant case.” The court found, however, that if an employer decides to terminate an employee, it “must be prepared to pay him or her in full.” According to the court, this “may mean that employees who, like the plaintiff, have engaged in illegal or otherwise harmful conduct may have to be suspended rather than terminated for a short period of time until the employer can comply” with the Wage Act.

Implications

Under Reuter, employers face substantial liability if proper payment is not made to an involuntarily separated employee.

There are no exceptions under the statute. Even if an employee needs to be terminated on the spot for serious misconduct, employers must be prepared to pay that employee in full at that time.

This decision creates practical challenges for employers. For example, in the current remote workforce environment, an employee may not be at the workplace at the time of termination. The use of direct deposit and third-party payroll providers presents logistical obstacles for same-day payment. Any technical issues as to payment, including the payroll provider’s failure to initiate a payment as directed by the employer, or even a cyberattack or system failure beyond the employer’s control, would apparently not provide any relief from mandatory treble damages.

The Reuter decision may also incentivize employers to challenge wage claims more aggressively and to be increasingly hesitant to settle such claims. Late payment of a contested amount no longer eliminates the threat of treble damages, but instead could be viewed as an admission that treble damages are automatically owed.

There may be more to come. The concurring opinion suggested that in addition to an employee being entitled to treble damages on the principal amount owed, they may also be entitled to other “damages incurred” including consequential damages stemming from a late payment, an issue the SJC declined to consider under these facts. The potential retroactive effect of this decision on previously resolved wage and hour claims is also a looming question.

©2022 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XII, Number 102
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About this Author

Jack Gearan, Greenberg Traurig Law Firm, Boston, Education, Labor and Employment Litigation Attorney
Associate

Jack S. Gearan is a lawyer in the Boston office of Greenberg Traurig, LLP. He concentrates his practice in the areas of business litigation and employment law. Jack has experience in all phases of civil litigation including discovery, mediation, arbitration and trial.

Jack’s business litigation practice covers a variety of business torts, including misrepresentation, fraud, contract disputes, and claims under Massachusetts General Laws Chapter 93A – the Massachusetts unfair trade practices statute.

Jack also regularly...

617-310-5225
Justin Keith, Greenberg Traurig Law Firm, Boston, Labor and Employment Litigation Attorney
Associate

Justin F. Keith represents employers in all areas of labor and employment law—including litigation of discrimination, harassment and retaliation claims, reductions in force, and numerous other personnel and workplace issues—before state and federal agencies and in courts throughout the country

He is experienced with wage and hour class actions brought under the Massachusetts Wage Act and nationwide collective actions under the Fair Labor Standards Act. He represents employers across a broad spectrum of industries, including retail,...

617-310-6230
Terence McCourt, Greenberg Traurig Law Firm, Boston, Labor and Employment Litigation Attorney
Shareholder

Terence P. McCourt is Managing Shareholder of the Boston office and Chairman of its Labor & Employment Practice. He represents a broad range of organizations in all facets of management-side labor and employment law. During more than two decades of practice, Terry has gained a national reputation for his practical, solution-oriented approach to employment law issues.

With wide-ranging litigation experience, Terry handles diverse employment matters, including employment discrimination and wrongful termination cases in state and federal courts...

617-310-6246
Amanda L. Carney Labor & Employment Litigation Attorney Greenberg Traurig Boston, MA
Associate

Amanda L. Carney represents clients in a broad range of commercial litigation and labor and employment matters, including claims involving discrimination, harassment and retaliation. She is experienced with handling matters in state, federal, and appeals court, and before the Massachusetts Commission Against Discrimination. She also assists clients with conducting internal investigations involving employee misconduct. Amanda provides clients with day-to-day counseling on a variety of matters regarding wage and hour laws, internal investigations, employee handbooks/policies, and compliance...

617.310.5268
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