United States: Massachusetts High Court Rules That Sick Pay Does Not Constitute Wages Under State Law

Last Updated: February 1 2018
Article by Christopher B. Kaczmarek

On January 29, 2018, the Massachusetts Supreme Judicial Court held that sick pay does not constitute wages under the Massachusetts Payment of Wages Law, M.G.L. c. 149, § 148. As a result, employers are not liable under the Payment of Wages Law if they choose not to pay out accrued, unused sick pay to employees upon termination of employment.


The case of Tze-Kit v. Massachusetts Port Authority arose out of a fairly unusual sick leave policy. In this case, the employer's sick leave policy provided that, upon termination of employment, eligible employees receive payment for a percentage of the value of their accrued, unused sick time. Under the policy, the percentage would vary depending on the employee's tenure, i.e., employees who were employed for a longer period of time, or who remained employed until retirement or death, received a greater percentage of their unused sick time. The policy further provided for no payment of accrued, unused sick pay to employees discharged for cause.

Here, the employer initiated disciplinary proceedings against the plaintiff. One week later, the plaintiff applied for retirement. The employer ultimately terminated the plaintiff's employment for cause. As a result, the employer did not pay the plaintiff for his accrued, unused sick time based on its application of the policy.

An arbitrator, however, overturned the employer's termination decision, finding that the employee retired before he was terminated. In light of that decision, the employer paid the plaintiff the full value of his accrued, unused sick leave (amounting to $46,755.41). Because of the lengthy grievance and arbitration proceedings, however, the employer did not make this payment until over a year after the plaintiff's last day of employment.

Plaintiff then sued under the Payment of Wages Law because the employer had not paid him within the time frame required by the statute for final wage payments. After the trial court ruled for the plaintiff, his former employer appealed.

The Court's Decision

Under the Payment of Wages Law, employees who resign must be paid in full on the next regular pay day. In contrast, employees who are discharged must be paid in full on the day of discharge. These obligations apply only to "wages." Thus, the key question on appeal was whether accrued, unused sick leave constituted "wages" under the Payment of Wages Law.

The Supreme Judicial Court began its analysis by noting that the Payment of Wages Law contains no definition of "wages." The statute provides, however, that the term wages does "include any holiday or vacation payments due an employee under an oral or written agreement." The term also includes "commissions . . . [that have] been definitely determined and ha[ve] become due and payable to [the] employee." After reviewing this language, the court noted that the mere fact that the statute does not specifically include sick pay within the meaning of wages does not mean that it necessarily falls outside the scope of the statute.

Nonetheless, the court then concluded that the Legislature did not intend to include sick pay as wages under the Payment of Wages Law. First, the court observed that because employees' use of sick time is conditional – it can only be used when an employee or family member is ill – employees "do not have an absolute right to spend down their sick time, employees are not typically compensated for accrued, unused sick time." Indeed, the court noted that it is common for employers to have "use it or lose it" sick leave policies.

Second, under the circumstances of this case, the court noted that the employer's payout of accrued, unused sick leave is "essentially, a contingent bonus paid to separating employees for not having used all of their accrued sick time and not engaging in conduct warranting termination for cause." In that light, the court stated that the only contingent compensation recognized as wages under the Payment of Wages Law is commissions (which are expressly referenced in the statute).

Third, the court based its decision in part on the fact that designating sick pay as wages in this case would have made it impossible for the employer to comply with its obligations under the statute, given that the arbitrator overturned the employer's termination decision over a year after the employee's resignation.


The Tze-Kit decision is a helpful reminder to Massachusetts employers regarding their obligations under the Payment of Wages Law: (a) employees who resign must be paid their wages in full on the next regular pay day; and (b) employees discharged must be paid their wages in full on the day of discharge. In this context, wages means at least salary or an hourly wage, plus accrued unused vacation time and commissions that have been definitely determined and have become due and payable to the employee. Employers that violate these obligations are liable for mandatory awards of treble damages and attorneys' fees under the law.

This decision also clarifies that accrued, unused sick pay generally does not constitute wages under the Payment of Wages Law. Notably, although this case dealt with a sick pay policy put in place prior to Massachusetts' adoption of its Earned Sick Time Law, the same conclusion should apply to sick leave accrued under the law. Indeed, the regulations issued by the Attorney General under the Earned Sick Time Law state that employers do not have to pay out unused earned sick time upon termination of employment.

That said, employers that utilize Paid Time Off ("PTO") programs to satisfy their obligations under the Earned Sick Time Law should be aware that, if, as is often the case, PTO can be used for both vacation and sick time purposes, then accrued, unused PTO likely would be considered to be wages and must be paid out upon the termination of the employment relationship.

Employers should consult experienced employment counsel when attempting to adopt or revise sick time and/or PTO policies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Christopher B. Kaczmarek
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions