The steady stream of wage and hour litigation in Massachusetts
state and federal courts continues unabated. As employees and
employers present a variety of claims and defenses, the courts
respond with one clear message: employee wages will receive broad
protection. The recent decisions not only emphasize the expansive
reach of the Massachusetts Wage Act ("MWA") but also
contain additional developments that will raise the stakes.
Recently, courts have reexamined statutory provisions that had been
interpreted reliably in favor of employers. Despite unambiguous
statutes of limitation, courts have allowed plaintiffs to reach
back more than three years to recover unpaid wages. And, in one
case, plaintiffs combined state and federal causes of action to
sidestep a seemingly valid employer defense. Employers beware:
these decisions may lead to additional recordkeeping and discovery
burdens, increased damage exposure, and decreased settlement
leverage.
Lowering the "Administrative Exhaustion"
Hurdle
The MWA describes the process for a worker to bring a claim for
unpaid wages. G.L. c. 149, §§ 148, 150. The statute
provides that the worker must file a complaint with the Office of
the Massachusetts Attorney General ("AG"). Specifically,
section 150 states that an employee:
may, 90 days after the filing of a complaint with the attorney general, or sooner if the attorney general assents in writing ... institute and prosecute ... a civil action....
Previously, courts had interpreted this language literally, to
mean that an employee must exhaust all administrative remedies by
first filing a complaint with the AG and then bringing a private
lawsuit ("the AG filing provision"). For example, in
Joyce v. The Upper Crust, LLC, 2012 WL 3028459,
at *6 (D. Mass. 2012) and Norceide v. Cambridge Health
Alliance, 814 F. Supp. 2d 17, 27 (D. Mass. 2011), the courts
dismissed the plaintiffs' MWA claims because they had not
fulfilled the "condition" of reporting alleged wage
violations to the AG. See Swanson v. Lord & Taylor,
LLC, 278 F.R.D. 36, 40 (D. Mass. 2011) ("The exhaustion
requirement is mandatory, and operates as a bar to suit if it is
not fulfilled.")
Recently, Massachusetts courts have adopted a more lenient, and
even directly contradictory, position. In Depianti v. Jan-Pro
Franchising Int'l, Inc., the Supreme Judicial Court
("SJC") held that the lower court had jurisdiction over a
wage claim, even though the plaintiff had not filed a complaint
with the AG prior to filing suit. 465 Mass. 607, 611 (2013). The
SJC acknowledged that the MWA "requires" a worker to file
a complaint with the AG but characterized that
"requirement" as "intended simply to ensure that the
Attorney General receives notice of the alleged violations, so that
she may investigate and prosecute such violations at her
discretion." Id. at 612. The court distinguished the
AG filing provision from a similar provision under the
anti-discrimination law, G.L. c. 151B. The court explained that c.
151B's "comprehensive remedial process" includes a
prompt investigation by the Massachusetts Commission Against
Discrimination, preliminary evaluation of probable cause, and a
conciliation program, all designed to resolve individual claims of
discrimination. Allowing a claimant to proceed directly to a
judicial forum would thwart that purpose. Id. at
612–613. According to the court in Depianti, the
process under the MWA has a different purpose, and the AG filing
provision is not jurisdictional. Therefore, the plaintiff could
notify the AG during the litigation. Id. at 610
n.8, 613-614. The decision is a reminder that courts interpret the
remedial laws governing wages, tips, independent contractor status,
and overtime liberally, "with some imagination of the purposes
which lie behind them." Id. at 620.
Similarly, in Schwann v. FedEx Ground Package Sys., Inc.,
2013 WL 3353776 (D. Mass. 2013), former delivery drivers who worked
as independent contractors filed suit for wages. FedEx objected
because not all plaintiffs had complied with the AG filing
provision. Citing Depianti, the court held that the
"administrative notice" requirement was satisfied because
the AG had previously issued citations to FedEx and was aware of
the matter. Id. at * 6–7. Moreover, because
one plaintiff had been authorized to file suit on behalf of
similarly situated workers, other plaintiffs did not need to obtain
individualized permission to sue. Id.
An employer's ability under prior case law to insist on strict
compliance with the AG filing provision might not have materially
affected its overall liability—but might have created an
opportunity to assert a statute of limitations defense to some
claims when the complaint was refiled. The recent decisions reflect
an unwillingness by the courts to impose technical barriers to
recovery for unpaid wages.
Reaching Beyond the Statute of Limitations
The Massachusetts Overtime Law, G.L. c. 151, §1A, requires an
employer to pay compensation at time and one-half the regular rate
("premium rate") for all hours worked over 40 hours per
week. An aggrieved employee must file a claim within two years.
Id. § 20A. The SJC recently allowed recovery for a
longer period of time, viewing plaintiffs' claims through the
lens of the MWA instead of the Overtime Law. Crocker v.
Townsend Oil Co., Inc., 464 Mass. 1, 6-8 (2012).
In Crocker, the plaintiffs worked as truckdrivers. More
than two years after their independent contractor agreements ended,
plaintiffs sued for unpaid overtime compensation under the MWA,
which has a three-year statute of limitations. The defendant argued
that any claim for unpaid overtime has a two-year statute of
limitations, even if filed under the MWA. The court agreed that the
two-year statute of limitations barred plaintiffs' claims for
compensation at the premium rate. However, the SJC allowed recovery
for up to one additional year, at a straight-time rate, under the
MWA. Id. at 7. The court in Crocker provided some
comfort when it held that plaintiffs could not rely on the
continuing violation theory to assert statutory violations older
than three years. Id. at 8-12. However, as discussed
below, employers might have exposure beyond even the three-year
period recognized in Crocker.
Recovery Under Common Law Claims
Plaintiffs often include in a wage complaint claims for breach of
contract, quantum meruit, unjust enrichment, conversion, or similar
claims. In many cases, the common law claims cover the same time
period and are based on the same facts underlying the alleged
statutory violation. See, e.g., Schwann, 2013 WL
3353776, at *6 (unjust enrichment claim dismissed as duplicative);
see Feygina v. Hallmark Health Sys., Inc., 2013 WL
3776929, at *8 (Mass. Super. Ct. 2013) (plaintiff "cannot
recover twice for the same consequential damages, merely because
she has asserted separate claims for breach of contract and
violation of the [MWA].") In effect, the MWA has been the
primary means to recover unpaid compensation.
In Lipsitt v. Plaud, however, the court directly
addressed the issue of whether the MWA is the exclusive remedy to
recover unpaid wages. 466 Mass. 240 (2013). The decision could have
significant consequences.
In Lipsitt, a museum director sued for unpaid compensation
that was more than three years overdue. The plaintiff dismissed his
time-barred MWA claims but pursued breach of contract and other
common law claims, reaching back six years. Id. at
243-244. The defendant argued that the MWA, as the exclusive
remedy, preempted the common law claims. The lower court agreed.
However, the SJC concluded that adoption of legislation does not,
by itself, preempt common law, and that the legislature had not
expressly or impliedly established the MWA as the exclusive remedy.
Id. at 247. The court acknowledged that plaintiffs may
prefer to bring claims under the MWA, with its enhanced penalties
and fees, despite the shorter statute of limitations. However,
"[i]t does not upset this balance to continue to subject
employers to normal contract liability for the full six-year
statute of limitations period applicable to contracts
generally." Id. at 250-251.
In a different case where relief under the MWA was unavailable for
other reasons, a federal court similarly allowed plaintiffs to
pursue common law claims. In Manning v. Boston Med. Ctr.
Corp., the plaintiff's statutory claims were dismissed
because the hospital was exempt from the MWA. 725 F.3d 34, 55 (1st
Cir. 2013). Defendants argued that the MWA preempted contract
claims based on the same facts. The court disagreed, holding that
the MWA did not displace common law claims either explicitly or
implicitly. Id. at 56-57.
The decisions in Lipsitt and Manning portend
further expansion of employer liability, inviting employees to
reach back an additional three years under a variety of
circumstances. First, as in Lipsitt¸ a plaintiff who
did not earn wages in the prior three years may be able to recover
unpaid wages from four, five, and six years earlier. Second, as in
Manning, a plaintiff who cannot assert a statutory claim
for whatever reason might still bring common law claims reaching
back six years. Third, plaintiffs might combine claims under both
the MWA, for three years of unpaid compensation plus attorneys'
fees and liquidated damages, and then for another three years of
unpaid wages, at straight time, based on common law. It is unclear
that the strategy would succeed because the holding in
Lipsitt applied "[p]articularly where an
employee's Wage Act claims are time barred" and because
such a maneuver would upset the "balance" that allows
enhanced penalties under the MWA in exchange for a shorter statute
of limitations.
Nevertheless, employers should review their recordkeeping
practices, as it appears increasingly prudent to retain wage
records for longer than statutorily required. G.L. c. 149,
§ 52C (retention for three years after termination); G.L.
c. 151, §15 (retention for two years after creation of a
record). The opportunity to reach back six years also affects the
discovery process, encompassing documents that are more likely to
be missing, archived, or incomplete. The scope of discovery could
expand because contract defenses that are not available under the
MWA may now be relevant. Moreover, the pool of potential defendants
could also grow. For example, employers who changed pay practices
more than three years ago might now be subject to suit for
long-abandoned policies. The increased scope of potential damages
could affect an employer's settlement
leverage.
Recovery Under Selective State and Federal
Laws
Finally, employers should be aware of a decision in which a
plaintiff sidestepped state overtime exemption provisions to
recover the maximum liquidated damages under state law. Carroca
v. All Star Enters. & Collision Ctr., Inc., 2013 WL
3496537 (D. Mass. 2013).
The Carroca case involved an employee who worked as an
auto body repairman. The court concluded that he was not exempt
under the Fair Labor Standards Act and was entitled to overtime
compensation, plus an equal amount as liquidated damages. However,
the plaintiff claimed that the failure to pay overtime under
federal law was, itself, a violation of the MWA's obligation to
pay wages in a timely manner and sought treble damages. Because the
plaintiff was not asserting a violation of the Overtime Law, the
defendant's reliance on a state law overtime exemption was
irrelevant. Id. at *3. As a result, the MWA's treble
damages provision applied. Id. at *4. A more aggressive
defense might have prevented this result, particularly because the
cases cited by the court to justify the award of treble damages
involved situations where both state and federal overtime laws
applied. In Carroca, a state exemption might have barred
recovery under state law. The case presents a cautionary example of
a plaintiff maximizing recovery by cherry-picking state and federal
laws.
Conclusion
The number of wage actions filed in the Massachusetts courts
continues to grow, due in part to publicity about sizeable damage
awards, including mandatory treble damages. Recent case law may
provide further incentive for plaintiffs as the courts continue to
clarify the breadth of the MWA's coverage, relax administrative
requirements, and permit alternative common law claims. The
practical impact on employers, particularly with regard to
recordkeeping, discovery burdens, and settlement leverage, could be
significant.
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