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Friday, April 22, 2022

Massachusetts Wage Act Provides for Automatic Treble Damages for Late Wage Payments

If an employer does not provide an employee leaving the company with his or her wage payments on time but quickly corrects the problem, that is the end of the issue, correct?  Not so fast, the Massachusetts Supreme Judicial Court recently held.  Even if the employer fails to make timely wage payments to a departing employee by mistake, the employer will be on the hook for automatic treble damages.  The SJC’s recent ruling and clarification of the Massachusetts Wage Act is essential information for all employers in Massachusetts to be fully informed about before failure to comply with the Act becomes a very costly mistake.

Massachusetts General Law c.149 § 148 states that "any employee leaving his employment shall be paid in full on the following regular pay day, and, in the absence of a regular pay day, on the following Saturday; and any employee discharged from such employment shall be paid in full on the day of his discharge..."  MGL c.149, § 150 provides for mandatory triple damages for weekly wage law violations.  While there is no law in Massachusetts that requires an employer to give employees vacation time, under MGL c.149, § 148 , if an employer offers any holiday or vacation payments to an employee as part of an oral or written agreement regarding their employment, these payments will be considered as wages under this law.  Under MGL c.41, § 111E, if an employee is terminated “through no fault or delinquency on his part or by resignation, retirement or death,” the employee shall be paid at their usual rate for any unused vacation they have accumulated.  In the case of Electronic Data Systems Corp. v. Attorney General & another, 454 Mass. 63 (2009), the Court found that the Massachusetts Wage Act required “the employee to be paid for unused vacation time remaining at the time of his involuntary discharge.”  See MGL c.149, § 148.



So, what does this all mean?  If an employer terminates an employee without cause, the employer must pay the employee all accrued wages and vacation time on the same day as the termination.  If the employer fails to do this, they are on the hook for treble the amount of unpaid wages.



In the recent case Reuter v. City of Methuen, the employer did not provide the employee with her accrued vacation time of nearly $9,000.00 until three weeks after her termination.  After the City of Methuen received a demand letter, the city paid $185.42 in trebled interest on the delayed payment plus attorneys' fees consistent with prior case law, which consistently limited damages to treble interest on the delayed wage payment made before the filing of a complaint, rather than treble damages on the full unpaid wage.  The SJC found that under the Massachusetts Wage Act, employees are entitled to automatic treble wage damages for any late wage payments, even if the employer fixed the payment error before the employee commenced a proceeding.  The SJC reasoned that the "over-all context and purpose" of the Massachusetts Wage Act "is directed at prompt payment of wages," thus any delay must be remedied by trebling the full amount of the late wages, as well as the Act's other statutory remedies, such as the recovery of the employee's attorney's fees.


So, what does this mean for employers?  Be very prepared and careful when deciding to terminate the employment of an employee.  Employers must make sure that they have the exact amount of accrued wages, including vacation time, and that it is paid at the time of termination.  If an employer is even a day late with paying its terminated employee, the employee will have the automatic right to three times the amount of the unpaid wages.  For example, if an employee is owed $3,000.00 in unpaid wages and $5,000.00 in accrued vacation time at the time of his or her termination, and the employer gives the employee a check for $8,000.00 on the day after he or she is terminated, the employer now must pay the employee (at least) $24,000.00.  That is a big difference to both the employer and the employee and lack of knowledge about the law is no defense for employers.


Employers must ensure timely payment of all wages earned to employees. The Reuter case makes it clear that if a Massachusetts employer does not pay an involuntarily terminated employee his or her final wages (including vacation pay) on the day of the discharge, the employer is liable under the Massachusetts Wage Act.  If the employer cannot provide the final wage check on the day it decides to terminate an employee, the employer should not terminate the employee on that day (if necessary, suspend the employee with pay to allow time to arrange the final wage payment and comply with the Massachusetts Wage Act.  As for voluntary terminations, employers are not required to pay on the day of discharge but must pay the employee in full the following regular pay day.

If you have any questions regarding the Massachusetts Wage Act, please feel free to contact the Law Offices of Samuel S. Reidy for a free consultation.


by Samuel S. Reidy, Esq.

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