Twenty years ago, the Massachusetts Legislature enacted sweeping changes to the Massachusetts Wage Act. Those changes have had a significant impact on Massachusetts employers' exposure to liability for violations of the Massachusetts wage laws. Massachusetts employers that have not conducted a review of their wage and hour policies over the past twenty years, or even in the past five years in light of the most recent court decisions, could be facing class action suits or criminal prosecution as employers' liability exposure for wage violations has never been greater.
I was serving as General Counsel to the wage enforcement agency,
Massachusetts Department of Labor and Industries, in the early
1990's. The country was climbing out of a recession and a
number of Massachusetts employers were not paying wages that they
owed to their employees. The numbers of wage claims that the
Department received was staggering: 6,000-7,000 were filed every
year. At that time, when an employer failed to pay wages owed to an
employee, the employee's only recourse was to file a complaint
with the Department. The Department, in turn, could seek
enforcement of the individual's wage complaint through criminal
prosecution. Although the Department resolved most complaints prior
to criminal prosecution, it still had hundreds of cases in court.
It proved challenging because the courts' dockets were flooded
with cases concerning violent crimes and, understandably, the
courts gave lower priority to wage cases.
The Department concluded that we had to find an alternative to
prosecuting employers in the criminal courts. It was not working as
a deterrent and the process was inefficient. The Massachusetts
Legislature responded in 1993 by moving the enforcement of the
Massachusetts Wage Act to the Office of the Attorney General and
creating a private right of action that provided individuals with
the ability to hire their own attorneys to file civil suits in
court on their behalf. If successful, the court would award treble
damages as well as attorney's fees and costs to the
individuals. M.G.L. c. 149, § 150. The Legislature also left
the criminal penalties, including the potential for incarceration,
intact.
The Legislature has continued to add to the array of tools that
individuals have to pursue employers for failing to pay wages. The
Attorney General's Office can still pursue criminal penalties
against employers for violating the wage and hour laws, which
include a fine of up to $25,000 and one year of imprisonment if the
violation is without willful intent. M.G.L. c. 149, § 27C. If
it is with willful intent, the criminal penalties are a fine of up
to $50,000 and two years of imprisonment. Id. Under the
civil citation system adopted in 1998, the Attorney General's
Office can issue a civil penalty of not more than $25,000 per
violation. Id.
The one change that has caused the most consternation is,
undoubtedly, the private right of action. There has been a growth
in class action suits and individual wage claims in Massachusetts
courts. This litigation has led to the Supreme Judicial Court
issuing several noteworthy rulings in recent years: (i) an employer
is limited in its ability to make deductions against an
employee's wages, Camara v. AG, 458 Mass. 756 (2011);
(ii) an individual can release his or her wage claims against an
employer if the release is stated in clear and unmistakable terms,
Crocker v. Townsend Oil Co., 464 Mass. 1 (2012); (iii) an
employer violates the Massachusetts Wage Act when that
employer's policy requires terminated employees to forfeit
accrued, unused vacation time at the time of discharge, Elec.
Data Sys. Corp. v. AG, 454 Mass. 63 (2009); and (iv) the
failure to pay an employee at the time of termination cannot be
mitigated by an after-the-fact wage payment, Dixon v. City of
Malden, 464 Mass. 446 (2013). The Legislature went so far as to
revise the Massachusetts Wage Act several years ago to ensure that
the courts have no discretion to deny treble damages. An individual
who wins in court will automatically receive treble what the
employer owed the individual, despite any mitigating circumstances.
Even if the employer has paid all of the wages owed to the
employee, the employee can still seek treble damages of the
interest (at 12% per annum) on the wages as well as fees and costs
when the employer fails to pay the employee's wages in a timely
manner. See Parow v. Howard, 17 Mass. L. Rep. 149
(Mass. Super. Ct. 2003); Dobin v. CIOview Corp., 16 Mass. L.
Rep. 785 (Mass. Super. Ct. 2003).
The trend is clear: individuals will have continued success in
pursuing their wage claims against unsuspecting employers. It is
time for Massachusetts employers to review their payment policies
and practices.
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