Unused Sick Time Does Not Count as Wages under Massachusetts Wage Act
On January 29th, Massachusetts’ Supreme Judicial Court held that accrued, unused sick time does not count as wages under state employment law, as employment lawyers in Massachusetts had previously anticipated.
Under Massachusetts law, employers must pay terminated employees in full for all “wages” earned by the employee. For employees who resign, the payment is to be made by the next regular pay day. For employees who are terminated, the payment is due on the day the employee is discharged. Because the Wage Act imposes strict liability for treble damages, ensuring that payments are made in a timely manner is a significant concern for employers.
In Mui v. Massachusetts Port Authority, Plaintiff-employee Tze-Kit Mui claimed that Massport violated the Massachusetts Wage Act by failing to timely pay him for his accrued, unused sick time when he retired. The Massachusetts Wage Act does not include sick time in its definition of “wages.” Rejecting the claim, the Court stated that it will not “add language to a statute where the Legislature itself has not done so.” It further reasoned that it has previously “declined to expand the meaning of ‘wages’ under the act to other types of compensation not expressly mentioned in the statute,” and therefore it was unwilling to do so in this case.
The SJC also discussed the differences between unused sick time and unused vacation time (which must be paid as wages upon termination). “Like vacation time,” the court stated, “sick time is often accrued as one works for an employer. However, unlike vacation time, which can be used for time away from work for any reason, sick time is to be used only when the employee or a family member is ill.” The SJC held, therefore, that sick time is unlike vacation time in that it is a contingent benefit, and thus should not be included as wages.
Addressing Massport’s sick leave payout policy in particular, which (unusually) provides a partial payout for unused, accrued sick time to employees who leave on good terms but not to those terminated for cause, the SJC compared the payout under Massport’s policy to other types of “contingent compensation,” like a contingent bonus program, which have previously been held not to constitute wages under the Wage Act. The SJC accordingly held that unused sick time cannot count as wages under the Wage Act.
The decision does not break new ground, as the common understanding has been that sick time falls outside the punitive provisions of the Wage Act, but practitioners and employers benefit from the certainty from having the Court say so explicitly – particularly here, where Massport permitted some payouts of sick leave post-termination, which many employers do not.