Highest court in Massachusetts deals triple threat to employers

The Massachusetts Wage Act requires employees to be paid within set time frames. For example, if employees work five or six days in a calendar week, they have to be paid within six days of the close of the pay period. As another example, if employees are involuntarily terminated, they must be paid their wages, including accrued, unused vacation, on the separation date. (This rule is a little different for employees who voluntarily resign). The Wage Act carries stiff penalties, including mandatory triple damages for violations and attorneys’ fees and costs. For years, employers believed, and lower courts agreed, that so long as an employer remedied a late payment under the Wage Act before an employee filed a lawsuit, the employee couldn’t recover triple damages on the late payment. But a recent case decided by the Massachusetts Supreme Judicial Court (SJC), the state’s highest court, turns that belief on its head.

Small mistake has big consequences

When Beth Reuter was involuntarily terminated by her employer, the city of Metheun, it mistakenly failed to pay her for accrued vacation time totaling more than $8,000 on her last day of employment. Instead, she was paid her unused vacation time three weeks later.

Reuter hired an attorney who sent a demand letter to the city seeking more than $23,000 in damages, which represented three times the late vacation payment and attorneys’ fees, minus the vacation payment made three weeks after her separation. In response, the city paid what it apparently calculated to be three times the interest accrued during the three weeks she wasn’t paid her vacation time.