The Massachusetts Wage Payment Act

Penalties for Failing to Pay Wages Due on Time are Severe, and Employers must be Wary of Legal Traps, Particularly those that Apply on Termination of Employment

It seems simple enough - an employee earns wages, leaves the company, and gets a check for what's due. More and more often, however, former workers are consulting attorneys and bringing lawsuits for money owed but unpaid on termination. Because the penalties for failing to pay wages are severe, employers must be versed in Massachusetts laws that govern what they must pay and when.

First and foremost, companies need to know what's at stake when wages go unpaid. Under the state's wage payment law, companies who fail to pay money owed to their employees face civil and criminal penalties. Most commonly, workers bring lawsuits to collect wages they claim are due them. The Massachusetts Wage Act provides that successful employees must be paid all money owed and be reimbursed for the legal fees they incur in collecting their wages. Under some circumstances, employers can be required to pay three times the withheld wages as a penalty for their transgression of law. The corporate structure provides no refuge; presidents, treasurers and other decision-makers are personally liable. All involved might also face criminal sanctions that include fines or even jail time, though imposition of this type of sanction is not common.

The Wage Act requires employers to pay workers' wages under prescribed time frames. The term "wages" includes regular salary (or hourly pay) along with earned commissions and, when employment ends, pay in lieu of unused vacation time. Problems with wage payments arise most commonly when a worker leaves a company, whether by choice or upon termination or layoff. When an employee quits, wages must be paid on the next regular pay date. When he/she is fired, all wages due must be handed over immediately, before the worker leaves the property.

Trouble commonly arises in the latter situation, which is typically contentious to begin with. Employers sometimes fail to pay undisputed wages, electing instead to await the next regular payday, or fail to properly calculate and pay amounts due. The latter error is often caused by a company's failure to understand that earned commissions, holiday pay, and vacation time constitute wages under Massachusetts law. All these types of funds must be paid under the Act.

The vacation issue may be the most troublesome for employers, and the Massachusetts Attorney General has issued an advisory alert to help on the subject. Though employers are not required to grant vacation time, they must pay over whatever they do award to their employees. When an employee leaves work, the company must determine how many vacation days are accrued and unused. It must make wage payment in lieu of these vacation days when it makes final payment of wages to the worker.

Similar rules apply in commission situations. Where company policy dictates that commissions are earned upon a specific occurrence, the money owed must be paid out when the conditions are met, regardless whether the worker leaves the company before the payment date. Commissions sometimes differ from bonuses, which might include a requirement that employees be employed on the payment date.

By Attorney Jack K. Merrill - Framingham, MA Employment Lawyer

Attorney Jack K. Merrill is a Massachusetts employment lawyer and specializes in employment law and civil litigation. He counsels small businesses and individuals on discrimination cases and other employment related legal matters. 

With law offices in Framingham, MA and Milford, MA, our employment law lawyers provide legal services to individuals and businesses throughout the Boston metro west and Worcester county region including Ashland, Dedham, Framingham, Franklin, Hopkinton, Maynard, Marlborough, Milford, Natick, Needham, Newton, Shrewsbury, Sudbury, Waltham, and Worcester, Massachusetts.