Out of Bounds: employers now face Massachusetts Wage Act exposure from claims brought by employees living and working out-of-state
At least according to one judge sitting in the Massachusetts Superior Court’s Business Litigation Session, the Massachusetts Wage Act’s protections can expand beyond the borders of the Commonwealth—even when employees do not live in Massachusetts or have a central work location in the Commonwealth. In the recent decision of Dow v. Casale (CA No. 10-1243-BLS1), Judge Lauriat, a well-respected Massachusetts trial court-level judge, ruled that Russell Dow (“Dow”), a Director of Sales who lived and worked in Florida, could sue his Massachusetts-based employer for unpaid commissions under the Massachusetts Wage Act. In reaching his decision, Judge Lauriat ruled that the Wage Act protects an employee working and living outside of Massachusetts so long as the employee had “significant contacts” with Massachusetts in connection with his or her employment. Applying the “significant contacts” analysis to Dow, the court found the following facts sufficient to permit Dow to bring a Massachusetts Wage Act claim against his employer:
- Dow used a Massachusetts business address and a Massachusetts telephone and fax number, even though he did not have a dedicated office in Massachusetts and primarily worked out of his house in Florida.
- Many of Dow’s customers were based in Massachusetts, and Dow visited them twenty times within two years.
- Dow had almost daily telephone contact with executives at his employer, who worked at his employer’s Massachusetts headquarters.
- Any paperwork from Dow’s sales were sent from and returned to his employer’s Massachusetts location.
Unfortunately for employers, the Dow decision continues the recent trend over the past few years to strengthen the Massachusetts Wage Act’s provisions and expand its scope. In 2008, Massachusetts became the first state in the country to award mandatory treble damages against an employer that violates Massachusetts’ wage and hour laws, regardless of the reason for the violation. Then, earlier this year, in the case of Juergens v. MicroGroup, Inc., a Superior Court judge found that an employee could bring a Wage Act claim for unpaid “severance pay,” despite an earlier Massachusetts Appeals Court decision, Prozinski v. Northeast Real Estate Services, LLC, ruling to the contrary. In allowing a claim for severance pay to proceed under the Wage Act, the judge in Juergens reasoned that a 2008 Supreme Judicial Court decision, Wiedmann v. Bradford Group, Inc., overruled the Appeals Court’s decision in Prozinski, and authorized a more expansive interpretation of the Wage Act.
Any organization whose employees have significant contacts with Massachusetts when performing their job duties should ensure that it is fully compliant with all of the requirements of the Massachusetts Wage Act. Employers (and certain officers of an employer) can be found liable under the Wage Act for, among other things: (i) failing to pay an employee the full amount of wages that are due to him/her; (ii) disputed amounts of bonuses or commissions; (iii) failing to pay an employee his/her paycheck, including a final paycheck, in a timely fashion or frequently enough; (iv) incorrectly classifying an employee as exempt from overtime wages; and (v) incorrectly calculating overtime pay. Failure to comply may result in the application of the Massachusetts Wage Act’s extremely onerous remedies, which include the imposition of mandatory treble damages, attorneys’ fees, interest at the rate of 12%, and even individual liability on the part of a company’s president, treasurer, or other manager who controls, directs, and participates to a substantial degree in formulating and determining policy of a corporation.
- The Juergens decision is likely to be of little practical effect, as evidenced by the Appeals Court’s 2011 decision in Suominen v. Goodman Indus. Equities Mgmt. Group, LLC, where the court found payments due to an employee are not covered by the Wage Act unless they fall into the categories of payments specifically delineated in the Act’s language. However, the Juergens decision clearly evidences a movement by some superior court judges to favor an expansive view of the Act’s coverage, even when unsupported by the Act’s language or prior precedent. [Back to reference]