Wage Laws A Minefield for Unwary Employers

Understanding a Variety of Massachusetts Laws that Regulate Wages is Essential
for Employers, who Face Steep Penalties for even Unintentional Violations

By Jack K. Merrill, Esq.

One employer managed to turn $60,000 in wages it owed into a $500,000 judgment. Another paid $130,000 to avoid the much bigger risk it faced from a $40,000 claim. A third paid $950,000 to settle a class action suit that threatened to put it out of business entirely.

What links these employers is a misunderstanding of state law. None fully appreciated the expo-sure they faced under the Massa-chusetts Wage Act, and each care-lessly ignored its terms. Whether the error is failing to pay for all hours of work to the fraction, misclassifying workers as contractors, or withhold-ing earned wages, the result is the same – employers who break the law face triple damages, 12% in-terest, and attorneys’ fees for both their own lawyers and those em-ployed by their opponents.

A threat of suit under the Wage Act is a powerful weapon in the hands of a capable employee’s attorney. All he or she needs to bring tremendous and dispropor-tionate pressure to bear on an em-ployer is a viable claim for wages owed. Those who don’t buckle face huge damages risks. They are often forced to pay far more than they might owe to their workers in order to avoid the catastrophe that awaits if they opt to fight what proves to be a losing battle. [Read more…]

Business Owner Accused of Improperly Paying Overtime Wages

Our client was a restaurant owner who was faced with a lawsuit claiming that he did not properly pay overtime wages to a former employee. He was also accused of not paying for certain work time during the day, including break times. We came into the case after it was already pending and were forced to quickly work through the discovery process. We obtained and reviewed a variety of documents that allowed us to fully evaluate the restaurant’s record-keeping and pay practices. The case was filed in state court.

Result:  We recognized the limit on overtime pay contained in Massachusetts law and filed a motion to dismiss that claim. When the plaintiff saw the motion, she recognized the weakness of her position and agreed to a favorable settlement that avoided for our client the cost of trial. He paid far less to resolve the suit than it would have likely cost to try and win it.

$500,000 Judgement in Wage Act Claim

Our client was an employee who worked as a loan originator for a private mortgage company. After his plans to move to another employer became known, his company attempted to retain his services and, when the effort failed, fired him in an angry tirade. Management was apparently so frustrated by his defection to a competitor that it refused to hand over his last commission check for about $60,000. The company continued to insist it could do this after a written demand was made by our office, and litigation ensued. To defend itself against our client’s Wage Act claim, the company claimed that our client caused it damages by soliciting customers to follow him to his new employer.

Result: Following a two-day arbitration hearing, we successfully obtained a judgment that exceeded $500,000 for our client. This included penalties, interest and legal fees under the Wage Act. We were also able to wholly defeat all counterclaims raised against our client relating to his supposed misconduct, all of which was shown to be untrue.

New Equal Pay Law: Employers Beware

The Massachusetts Equal Pay Act, a Toothless Lion for Decades, was Rewritten in July and may now become an Effective Weapon against Gender Pay Discrepancies

By Jack K. Merrill, Esq.

It was a long time coming, but promises of gender pay fairness in Massachusetts now have a chance of being fulfilled. A rewritten Equal Pay Act seeks to erase enforcement roadblocks set up by courts as it gives employers time to head off pay discrimination lawsuits.

The legislature hopes that the new law will eliminate gender pay gaps without a rush to the courthouse. As it redefines the proof standard for pay bias, the law gives employers nearly two years to evaluate pay scales and make “reasonable progress” to eliminate gender discrepancies. Those who do so may have an absolute defense to lawsuits. Those who don’t will face individual or class action claims.

Like most wage lawsuits, pay discrimination claims will be costly. Employers who lose will pay double the amount of wage shortfalls that result from gender pay differentials. They’ll also be required to pay employee legal fees and lawsuit costs in addition to their own. These expenses will be high in any equal pay case. In class actions, they’ll likely be exorbitant.

The key change that makes the revised Act worrisome for employers is the definition of the term “comparable,” the foundation on which pay differences between men and women are determined. Courts now require women to prove their job duties ‘have important common qualities’ with those of male counterparts. That requirement, a very difficult one to satisfy, is being replaced, and women – or men, of course – will soon win equal pay claims by proving only that their jobs require the same levels of skill, effort and responsibility as the jobs to which they are compared. [Read more…]

Noncompetition Attack Against Start-up Business Defeated

Our client was a personal trainer who, after her work hours were cut dramatically and she was told her body type presented the wrong image for her employer’s clientele, decided to start her own workout business. Though her plans had a different focus and she did not plan to either solicit or service customers she worked with for her former employer, it nonetheless launched a sneak attack in the superior court. It relied on a supposed noncompetition agreement that our client signed with a former employer and, late on a Friday afternoon, requested an emergency order to block our client’s business from opening the following day. By misrepresenting a key fact, the former employer succeeded. Our client was not provided an opportunity to be heard. When notified of the court’s order, we arranged a quick hearing to dissolve it, met with our client on a Sunday afternoon, and prepared for hearing two days later.

Result: Based on a detailed affidavit and memorandum on various requirements of noncompetition law that the Plaintiff ignored at its emergency hearing, we were able to persuade the court that it had erred in issuing a restraining order. It concluded that the contract the Plaintiff relied on was not valid and that it had no basis to restrict our client from competing in the marketplace. The prior order was dissolved and our client opened her personal training business several days later.

Broad Changes To Massachusetts Employment Laws Take Effect In 2015

By Jack K. Merrill, Esq.

In 2015, new laws and court decisions again brought big changes to employer/employee relationships. The net effect will likely be to increase the burden on Massachusetts businesses.

The biggest change should be familiar to all – the law requiring that all employees earn sick leave and that many of them be paid for using it. Massachusetts also amended its maternity leave statute to formally cover men on the same terms as women. Meanwhile, the state’s minimum wage rate continued its rise. Offsetting these changes to some degree are court interpretations of the independent contractor law that limits its applicability in two industries.

Here’s a summary of some but not all employment law developments from 2015.

Sick Leave

The statute that took effect on July 1, 2015 requires all employers to provide sick leave benefits to their employees. Accrual must occur at a rate of no less than one hour for every 30 worked, and, for employers of 11 or more workers, the time off must be paid. The statute places substantial limits on employer authority to challenge sick leave use, which need not be medically supported until it exceeds three consecutive work days. Since all employers must implement written policies, it’s more important than ever that all have employee manuals, regardless (almost) of company size. [Read more…]

Employee Handbooks: Critical For Managers

Complying with Employment Laws and Communicating Work Rules to Employees is Demanding, and Trying to do so without Written Policies Brings Substantial Risk

By Jack Merrill, Esq.

Keeping up with employment laws is tough on employers. New ones get enacted and old ones change. Complying with them all is essential, since breaking even one can cause major damage.

Still, many companies neglect a simple tool that protects them and makes communicating with employees far easier: employee handbooks. Putting one together is easier than it seems and can normally be contracted out. Once done, an effective and regularly updated employee manual can help ensure that costly violations of wage and other employment laws are avoided.

Handbooks generally cover all rules and policies that apply to workers. Work weeks, pay days, dress codes, and other routine matters should be covered. Doing so effectively ensures that employees know company rules and either comply with them or face consequences, which themselves should be spelled out in the handbook. Any manager can see the benefits of such communication. [Read more…]

Sick Leave Law Ready to Launch

As of July 1, all Massachusetts Employers must Provide Sick Leave Benefits to all Employees. Regulations by the Attorney General Offer Guidance, Warnings.

By Jack K. Merrill, Esq.

All employers should be aware by now that the new voter initiated sick leave law takes effect July 1, 2015. Under its regulatory authority, the state’s Attorney General has now issued final rules that govern the law’s implementation and warn about penalties for transgressing it.

The sick leave law may bring headaches to employers, who must award and track sick time in new and potentially tedious ways. Most will be forced to adjust existing sick leave policies to comply with the law, and all must reduce them to writing and post employee alerts in the workplace. Because penalties for violating the new law can be severe, employers who have yet to implement it need to move quickly and do so.

The law was voted into effect last November. It requires that every Massachusetts employee receive one hour of sick leave for every 30 hours of work. The time off must be paid by employers of 11 or more and can be used for personal or family illnesses, to attend medical appointments, or to address domestic violence issues. [Read more…]

2014 Statutes Increase Employer Obligations

By Jack K. Merrill, Esq.

In prior years, employment law changes came primarily from courts and could reasonably be characterized as adjustments. In 2014, however, Massachusetts enacted several new laws that will have major effects on employers.

The changes will bring increases to the minimum wage rate, mandatory sick leave benefits, and new rights for domestic workers. When the permanent creation of the Council on the Underground Economy and the early 2015 paternity leave law are considered, the landscape for employers looks substantially different.

Here’s an overview of each of the 2014 statutory changes.

Minimum Wages

Massachusetts was not the only state to raise the minimum wage rate last year, and the Commonwealth’s approach will be long-lasting. The phased increase will ultimately bring the minimum hourly rate to $11 on January 1, 2017. The rate went to $9 on the first of this year and will increase to $10 on January 1, 2016. Tipped employees also got increases, to $3/hour in 2015, $3.35 next year and $3.75 in 2017. In addition to these minimums, tipped employees must receive enough in tips to bring their total hourly earnings to the applicable minimum rate. Any shortfall must be made up by employers. [Read more…]

New Sick Leave Law Covers All Employers

The Statute Approved by Voters in November Requires
Employers to Provide Sick Leave Benefits by July 1, 2015

By Jack K. Merrill, Esq.

Though the process was unusual, the result is the same for employers – new obligations to workers. The sick leave initiative approved by voters on November 4 mandates benefits to all employees in Massachusetts and sets standards to comply with.

While most employers already offer sick leave benefits, the new law changes the playing field in important ways. Prescribed sick leave and job protections will be mandatory when it takes effect next July 1, and guidelines for leave use must be met. Regardless of current policies, all employers need to review their practices for statutory compliance. Most will be forced to make adjustments.

Part of the reason for this is uncertainty whether current policies will satisfy the law’s requirements. Part relates to specific conditions under which leave must be made available. And part derives from the grant of authority to the Attorney General’s office to make new rules.

The best approach, then, may be for employers to scrap their current policies and implement new ones designed to meet the specifics of the voter initiative. Doing so is easy enough, though adjustments might be necessary once the Attorney General implements its anticipated regulations. For now, employers should ensure that their sick leave policies include the following elements. [Read more…]