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Friday, June 21, 2013

Recent Wage Act Decisions by the Massachusetts Courts

The Massachusetts Supreme Judicial Court and an Appeals Court recently issued two separate decisions interpreting certain aspects of the Massachusetts Wage Act, which allows employees to seek relief against their employer and certain officers of the employer for nonpayment of wages.  

In first decision, Cook v. Patient Edu, LLC (decision here), the SJC held that managers of LLCs can be held liable individually for unpaid wages under the Wage Act. Specifically, a “manager who 'controls, directs, and participates to a substantial degree in formulating and determining' the financial policy of a business entity may be a 'person having employees in his service' under G.L. c. 149, § 148, and thus may be subject to liability for violations of the Wage Act,” [citations omitted].

The issue before the Court was whether the legislative intent was to include managers of LLCs in the group of possible violators of the Wage Act, and the Court found that it did. The Court found a clear legislative intent to hold all individuals who contribute to a business's fiscal and employment policies responsible for how employees are treated.

In second decision, Dow v. Casale (decision here), a Massachusetts Appeals Court held that an employee’s private right of action under the  Wage Act did apply in the case of a traveling salesman who rarely set foot in Mass. This choice of law case basically states that where the Commonwealth has a close connection to the employment relationship of the parties, local law should be applied to the claim.

In this case the plaintiff worked as a salesperson for a Delaware corporation that had its a sole place of business in Massachusetts.  He resided in Florida and conducted most of his sales activity across the country. When the company closed its doors, it terminated his employment with significant commissions outstanding.  The question here was whether Massachusetts law would apply given that the plaintiff rarely visited the state.

The Court found that the nature of the plaintiff's work was such that only Massachusetts was tied to it. Factors examined by the Court include the governing law provisions in the plaintiff's employment agreement, the contact address used on the plaintiff's business cards, the location from which paychecks were issued, how often he traveled to the head office in Mass, and that he worked out of the same cubicle (albeit unassigned to him) when he was onsite.  

While distinguishing a case cited by the defendant where the Wage Act was not applied to an Australian employee operating outside the United States, importantly, the Court did acknowledge that the application of the Wage Act may be different in the case on a non-US employee.

 

Dimitry Herman

Adjunct Law Professor

New England School of Law

 

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