The Massachusetts Wage Act: A New Incentive for Employers to Pay Up

Since July 2008, Massachusetts employers have been subject to automatic treble damages (that is, three times the amount of any award) for violations of the Massachusetts Wage Act, M.G.L. c. 149, §§ 148-150. Nearly seven years later, however, it remained a debate as to whether an employer could escape treble damages if it made an employee whole for unpaid wages before the start of litigation.

The Massachusetts Superior Court in Littlefield v. Adcole Corporation has recently provided an employer-friendly response to the question, limiting the employee’s award to the amount of interest accrued between the date of termination and the date that the employee was paid in full, times three.

The plaintiff in Littlefield had filed a complaint for unpaid wages with the Attorney General’s Office—an administrative prerequisite to filing in court—shortly after his termination. The employer paid him in full for all claimed unpaid wages after he filed his complaint with the Attorney General, but before he filed a lawsuit in court. In the lawsuit, the employee argued that he was entitled to treble damages on the full amount of unpaid wages as of his termination date because he had filed a “complaint” (the administrative complaint with the Attorney General’s Office) before receiving full payment—and the Wage Act provides that an employer cannot use “payment of unpaid wages after the bringing of the complaint” as a defense. However, the court disagreed with the employee’s interpretation of the word “complaint,” finding that it meant a lawsuit in court. Because the employee did not file his court action until after he had been paid in full, the only amount to be trebled was the interest that accrued between his termination date and the date by which he was paid his wages in full.

The Littlefield decision provides important reminders and new insight about how employers can limit their liability for unpaid wages under the Wage Act:

1. Employers must pay terminated employees all wages owed on the day of termination, including all accrued vacation pay.
2. Employers who fail to pay all wages and accrued vacation on the termination date may owe triple the amount of these unpaid wages and vacation days. They may also be required to pay interest, attorneys’ fees, and litigation costs.
3. As a defense to Wage Act claims, an employer cannot use “payment of unpaid wages after the bringing of the complaint”—meaning that employers cannot avoid liability simply by paying the owed wages and vacation time after the employee has filed a complaint.
4. But the terms “bringing a complaint” or “sue,” for purposes of the Wage Act, mean filing a civil action or lawsuit in court, not filing a complaint with the Attorney General’s Office.
5. Employers who fail to pay a terminated employee all owed wages and accrued vacation on the termination date, but who pay in full before the employee sues in court (even if the employee has filed a claim with the Attorney General’s office), may avoid having to pay triple the sum of the owed wages and vacation. This is a good reason to pay an employee promptly after he or she claims unpaid wages where there is any potential merit to the claim. It also significantly reduces the incentive for employees (and their attorneys) to file lawsuits after full payment has been made.

Although the Littlefield case is not binding on other Superior Court judges – and the Massachusetts Appeals Court or Supreme Judicial Court may ultimately decide differently – the decision will certainly be persuasive in other cases unless and until an appellate court decides the issue.