The Massachusetts Wage Act, G.L. c. 149, §148 (the “Wage Act”) requires employers to pay employees discharged from employment all wages owed on the date of discharge. Employees who resign from their employment must be paid all wages on the next regular payday following the end of their employment. This requirement to pay all wages owed to an employee upon separation of employment includes an obligation to pay all regular wages, as well as an obligation to pay the employee for any accrued, unused vacation and certain commission payments. Failure to comply with the Wage Act’s strict time deadlines will result in mandatory awards against the employer of treble damages and attorneys’ fees. Certain officers and agents having management of the company may also face individual liability for violations.
But what if the employer is only one day late with the wage payment? In the recently decided case of Reuter v. City of Methuen, SJC-13121 (Mass. April 4, 2022), the Supreme Judicial Court ruled that an employee is entitled to an award of three-times the amount of late paid wages as soon as the payment is late. The employer’s intent does not matter, and the outcome does not change based on whether the payment is one day or one year late. There is no ability for an employer to assert a “good faith” defense to the failure to pay wages on time under the Wage Act.
The facts of the Reuter case highlight the strict timing requirements of the statute. In Reuter, the plaintiff was discharged from her employment with the city due to alleged acts of criminal misconduct. The city paid the regular wages owed to plaintiff on her date of discharge, but waited three weeks following her discharge to pay the unpaid vacation owed to her in the amount of $8,952.15. A year after plaintiff’s discharge, an attorney demanded payment from the city for an additional $23,872.40, which represented a trebling of the late vacation pay owed to plaintiff, plus attorney’s fees, minus a setoff for the late payment. In response, the city offered the plaintiff payment of $185.42, which represented a trebling of interest the plaintiff arguably lost due to the three-week delay in the payment of her accrued vacation. The city refused to pay plaintiff for the claimed attorney’s fees or for an award of damages based on a trebling of the late paid wages. The plaintiff rejected the offer and filed suit.
Following a bench trial, the Superior Court ruled that the plaintiff was only entitled to the $185.42 damages figure based on the lost interest payments, which she had already received. However, because the city had committed a clear violation of the Wage Act by paying the vacation pay late, the Court agreed she was entitled to an award of attorney’s fees under the statute, and approved her request for $75,695.76 in fees and litigation costs. Both parties appealed the Superior Court’s ruling.
In reversing the Superior Court’s order on damages, the Supreme Judicial Court ruled that the Wage Act requires the prompt payment of wages and, when they are paid late, the trebling of those wages as liquidated damages to the employee. The Court rejected the city’s theory that the remedy for late payment should be based on the trebling of interest payments. The city’s theory of defense was based on a long string of Superior Court rulings dating back to Dobin v. CIOview Corp., Mass. Sup. Ct., No. 2001-00108 (Middlesex County Oct. 29, 2003), which the Reuter case ruled were “incorrect.” The Supreme Judicial Court underscored that it did not matter that the city had paid the accrued vacation before the plaintiff had demanded the payment or prior to filing a claim for unpaid wages. The Wage Act is violated as soon as a final wage payment is late, and that delay in payment is what triggers a plaintiff’s right to the trebling of the late paid wages as damages.
The Court acknowledged that by imposing strict liability the result may be harsh in some cases. However, the Court underscored that the statutory language is clear, and “[t]he Legislature has chosen the stick rather than the carrot to encourage compliance with the act …” by employers in Massachusetts.
Employer Takeaways
Per the Reuter decision, the Wage Act’s requirement is clear: Massachusetts employers must adhere to the strict time deadlines regarding the payment of wages to departing employees, otherwise, they will be liable for treble damages and attorney’s fees, if any. This means that when a Massachusetts employer decides to terminate an employee, the employer must be prepared to pay the employee in full on the date of termination. In some cases, when an employer seeks to terminate an employee abruptly, for example, where the employee has engaged in illegal or otherwise harmful conduct as in the Reuter case, it may be necessary to suspend, rather than terminate, the employee for a short period of time until the employer can comply with the Wage Act’s strict time deadlines for payment of final wages. In such a case, the Reuter court noted that the date of discharge for purposes of the Wage Act will be the day that the employee’s pay and benefits end, rather than the date the employee was told to stop work.