By: Christopher W. Morog, Robert T. Ferguson, Jr., and Lisa A. Zaccardelli

On April 4, 2022, the Massachusetts Supreme Judicial Court (“SJC”) issued a detailed decision addressing the consequences of an employer’s failure to timely pay earned wages to a terminated employee under the Massachusetts Wage Act (M.G.L. c. 149, § 148). Calling it an “important clarification of existing law,” the SJC imposed treble damages against the employer for its delayed payment of wages.

The plaintiff had worked as a school custodian, but lost her job after she was convicted of larceny. At the time of her termination, she had accrued $8,952.15 in unused vacation time. The town did not pay this amount at the time of her termination (a clear violation of the Wage Act). Instead, the town paid the accrued vacation time three weeks later. Contending that her employer violated the statute, the plaintiff issued a demand seeking payment of $23,872.40 (i.e., triple the amount of her vacation pay), plus legal fees. The employer declined to pay the amounts demanded. Instead, the employer tendered a check for $185.42, representing a trebling of twelve percent interest on the plaintiff’s vacation pay accruing from the time she was terminated to the date of the employer’s payment.

The trial judge concluded that the employer violated the Wage Act, but declined to treble the plaintiff’s vacation pay. Instead, the trial judge held that the plaintiff “was only entitled to treble twelve percent interest for the three-week delay in receiving her vacation pay, which she had already received.” The trial judge awarded the plaintiff more than $75,000 in attorneys’ fees. Both parties appealed.

The SJC made clear that, under the Wage Act, “a terminated employee is entitled to all accrued vacation benefits on the day of discharge.” In this regard, “[t]he statute leaves no wiggle room.” Designed to protect employees, the Wage Act “‘impose[s] strict liability on employers’ who must ‘suffer the consequences of violating the statute regardless of intent.’” In the Court’s view, “lost wages” extend to “all late payments under the Wage Act” and the statute requires “trebling of those wages as liquidated damages when they are paid late.” As a result, the fact that the employer actually paid the vacation time did not limit the employers’ statutory exposure to interest on the late payment. According to the Court, the remedy was “not the trebling of interest payments on those wages as found by the trial judge, but the trebling of the late wages.”

This decision not only clarifies the law, it underscores the harsh results that arise when an employer fails to strictly comply with the requirements of the statute. Employers should not only know and understand the applicable legal requirements, but should maintain and implement policies and procedures to ensure compliance with those requirements.

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