On April 4, 2022, the Massachusetts Supreme Judicial Court (SJC) provided clarity on the remedy for wage-and-hour law violations or late payment of wages in Reuter v. City of Methuen, No. SJC-13121 (Mass. April 4, 2022). The SJC held that the Massachusetts Wage Act (M.G.L. ch. 149, § 150) requires employers that fail to pay wages owed to employees by the date required to pay three times the amount of the wages (not just tripled interest) as liquidated damages. This decision is a significant shift away from a line of lower Massachusetts state and federal courts that held that when wages were paid late but prior to a complaint filing, the late-paying employer was liable for interest on the late payment, but not three times the amount of the underlying late-paid wages and not attorneys’ fees subsequently accrued. The Reuter decision serves as a significant warning to employers to make sure practices and procedures are in place to ensure the same-day payment of all wages owed on the date of termination.

Payment of Wages Under the Wage Act

Under the Wage Act, an employee’s pay (or wages) includes payment for all hours worked, including tips, earned vacation pay, promised holiday pay, and earned commissions that are definitely determined, due, and payable. Hourly employees must be paid every week or every other week (bi-weekly). The deadline for payment is six or seven days after the pay period ends, depending on how many days an employee worked during one calendar week. Employees who quit must be paid in full on the next regular payday or by the first Saturday after they quit (if there is no regular payday). Employees who are fired or laid off must be paid in full on their last day of work. M.G.L. ch. 149, § 148; 454 C.M.R. 27.02

The Reuter Case

Reuter involved an employee who was terminated after being convicted of larceny. The employer did not pay Reuter her approximately $9,000 in accrued and unused vacation time on her termination date, but it did pay her three weeks after her termination. After receiving the vacation pay, Reuter sent a letter to her employer demanding that it pay her triple her vacation pay, plus attorney’s fees. The employer responded by sending Reuter a check for $185, which represented a trebling of 12 percent interest accrued on the vacation pay during the three weeks of late payment. Reuter sued.

No Defense for Wage Act Violations

In the Reuter decision, the SJC was clear, there is no defense to any Wage Act violation, no matter how innocuous. This is significant, as prior to Reuter, lower courts had cautioned against providing claimants and their attorneys with a windfall for clerical errors that are quickly remedied. That protection for employers no longer exists. Instead, in Reuter, the SJC made clear that the Wage Act penalties are meant to be strict and “leave no wiggle room.” Id at 11. “By imposing strict liability […] the Legislature has decided that employers rather than employees should bear the cost of such delay and mistakes, honest or not.” Id. at 12.  

Penalties for Wage Act Violations

While Reuter dealt with late payment of wages after termination, the SJC’s strict interpretation of the penalty provisions of the Wage Act will clearly apply to any Wage Act violation. Late payroll that violates the Wage Act could be subject to treble the wage and attorneys’ fees. In addition, the concurrence in Reuter hypothesized that other “consequential damages” may be recoverable to injured employees harmed by Wage Act violations. For example, a Wage Act violation could lead to an employee being penalized for failing to pay their mortgage on time. Because the scope of consequential damages provided under the Wage Act was not before the Court, however, this remains an open question.

Key Takeaways

In light of Reuter, it is critical for employers to put in place rigorous protocols and procedures to ensure wages are paid on time and in accordance with the Wage Act. When immediate termination for employee misconduct is necessary but additional time may be needed to calculate final wages owed, employers may need to first “suspend” the employee until they can make final payment on the date of termination.  

The statute of limitations for Wage Act violations is three years. Undoubtedly, Reuter will invite employee-side attorneys to pursue even minor Wage Act violations. Violations should be remedied immediately. 

If you have any questions about Reuter or the Massachusetts Wage Act, please contact the below attorneys.