With our economy still lingering in a recession, companies continue to lay off employees in order to remain viable. And with layoffs, often attached is severance pay. A recent ruling by a Superior Court judge has determined that an employee’s severance pay is included in the Wage Act.
This law presents challenges for employers and opportunities for individual or class actions by employees. In 2010, employers who broke the Massachusetts Wage Act paid more than $8 million in fines and restitution to workers within the Commonwealth as reported by Massachusetts Lawyers Weekly, February 7, 2001 Ed. Plaintiffs who prevail in actions against employers for violating this act are automatically awarded treble damages, in addition to the previous available costs of litigation and attorneys fees. This act was designated “primarily to prevent unreasonable detention of wages”. Electronic Data Systems Corp. v. Attorney General, 454 Mass. 63, 70(2009), citing Boston Police Patrolmen’s’ Ass’n v. Boston, 435 Mass. 718, 720 (2002).
Under Massachusetts Law, to state a claim under the Wage Act, a plaintiff must prove:
(1) he was an employee under the statue; (2) his deferred compensation constitutes a “wage” under the statue, [and] (3) the defendants violated the Act by not paying his wages in a timely manner. “Stanton v. Lighthouse Financial Services, Inc. 621 F. Supp. 2d 5, 10 (D.Mass. 2009) citing Allen v. Imtralearn Software Corp., 2006 WL 127813, *1 5, 10 (D.Mass. App. Ct. Apr. 24, 2006)).
Given the increased exposure to employers under the Act, employers must pay close attention to the many and varied technical aspects of the Act to make certain they are in compliance.