The Massachusetts Wage and Hour statute mandates that employers pay departing employees their final wages, inclusive of accrued but unused vacation time, in their final paycheck on the day of termination. M.G.L. c. 149 §§148, 150 {the “Wage Act”). The timing is significant. Even a minor delay of a day can be costly. Under the Wage Act’s liquidated damages provision, such a violation results in treble the amount of late wages and interest accrued during the delay.
The Massachusetts Supreme Judicial Court has clarified that given the strict time-defined payment policies underlying the Wage Act, the damages for such a violation means that an employer is liable for three times the amount of the unpaid wages, plus reasonable attorneys’ fees and costs. This strict enforcement underscores the importance of timely payment to terminated employees under the Massachusetts Wage Act. See Reuter v. Methuen, 489 Mass. 465, 466 (2022).
Massachusetts companies put themselves at risk by not following this simple law. By way of recent example, a proposed class action was filed in Massachusetts state court this week against Thermo Fisher Scientific Inc. and a subsidiary for failing to compensate terminated employees for their unused time off on the date of termination. The class representative ultimately did receive payment but 11 days after his involuntary termination date. With hundreds of employees in Massachusetts who may meet the class definition, this timing error may prove to be very costly for the company.
The take-home message is that if employers are to avoid these substantial penalties, they must ensure that all final wages, including accrued vacation pay, are paid on the very day of termination. Management should be aware of the law and coordinate with HR and payroll personnel regarding the timing of employee termination and the cutting of the final, complete paychecks.
As always, the Wagner Law Group’s HR and Employment Law team is here to assist you with employment-related inquiries and solutions. In addition to helping our clients remain compliant with wage and hour laws, we create policies and advise on all matters relating to the employer-employee relationship. Please do not hesitate to reach out to Katherine Brustowicz, David Gabor, Johanna Matloff, Denise Chicoine, or Ed Englander for assistance.
