Overview

In a case of first impression, a Massachusetts Superior Court judge recently ruled that the Massachusetts Wage Act protects out-of-state employees, provided that they have sufficient contacts with the Commonwealth.

Dow's Employment with Starbak Communications, Inc.

In Dow v. Casale, et al., Superior Court Civil Action No. 10-1343-BLS1, Russell Dow, a former salesman at a Massachusetts technology company, sued several officers and directors of his former employer, Starbak Communications, Inc., alleging that the company failed to pay him more than $100,000 in unpaid commissions and other wages in violation of the Massachusetts Wage Act. Dow, a Florida resident, worked from home throughout his almost three years of employment with the company. When the company shut down its operations in February 2010 and terminated Dow's employment, it did not pay Dow unpaid commissions, expense reimbursements, and accrued but unused vacation upon Dow's termination. Payment for such wages upon termination of employment is required by the Massachusetts Wage Act.

Dow's Lawsuit and the Massachusetts Superior Court's Decision

In April 2010, Dow sued several officers and directors of Starbak for violation of the Massachusetts Wage Act, and sought treble damages and attorneys' fees. The defendants moved for summary judgment, arguing that the Wage Act does not apply outside of Massachusetts and, therefore, does not cover out-of-state employees, including Dow.

Judge Peter M. Lauriat of the Business Litigation Section of the Massachusetts Superior Court disagreed. Enforcing a broad interpretation of the Wage Act's applicability, Judge Lauriat held that the Wage Act may protect an out-of-state employee of a Massachusetts company if the worker has sufficient contacts with the Commonwealth.

Here, Dow, a salesman, conducted his business mostly through the Internet, the service for which was paid for by Starbak. He also was in daily contact with his supervisor in Massachusetts throughout his employment, had between 11 and 19 customers in Massachusetts, and traveled to Massachusetts more than twenty times between 2008 to 2009. Starbak during his employment did not assign Dow a dedicated workspace in its Massachusetts office, but Dow was provided the same cubicle when he was there. In addition, Dow's business cards listed as his contact information the company's Newton address and its Massachusetts phone and fax numbers. Moreover, all of the paperwork associated with Dow's work for Starbak was processed in Massachusetts, including all purchase orders from his customers, all invoices related to Dow's sales, and all payments resulting from such sales.

Judge Lauriat concluded "the Wage Act was designed to regulate the actions of Massachusetts employers, regardless of where the employees work." The judge further opined in a footnote that "in this age of the ubiquitous Blackberry, IPad [sic] and smartphone, any person can work in any location that has internet access. Were the court to accept [the defendants'] argument, the Wage Act would afford no protection to an employee who conducted the employer's business anywhere but in Massachusetts. This is hardly consonant with the purpose of the Wage Act, since an employer could escape potential liability simply by requiring an employee to work, for example, across the border in New Hampshire." The Judge then determined that Dow had sufficient contacts with Massachusetts to enjoy protection of the statute and may proceed with his suit against Starbak for violation of the Massachusetts Wage Act.

Action Items for Employers

The Massachusetts Wage Act, with its provisions for personal liability of officers and directors, automatic triple damages, attorneys' fees and costs, carries a heavy price for employers who violate it. Although Dow is a trial court decision (and therefore of no precedential value and is subject to being overruled by a higher court), it may be used for guidance by other courts and attorneys. Accordingly, because Dow extends the reach of the statute to out-of-state employees, Massachusetts employers should carefully examine their employment practices related to such employees to ensure that they comply with Massachusetts law.

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