Pre-Suit Tender Of Unpaid Wages May Limit An Employer’s Exposure To Treble Damages Under Massachusetts Wage Act

A recent decision by Superior Court Judge Thomas Drechsler offers guidance on how employers may reduce their exposure for treble damages under the Massachusetts Wage Act, G.L. c. 149, §§ 148, 150. In Littlefield v. Adcole Corporation, Judge Drechsler considered the case of an employer that failed to pay a discharged employee his earned wages and accrued vacation time on the date of his termination. The employer eventually made full payment two weeks after termination, and months before the employee filed suit. Under those circumstances, Judge Drechsler held that the measure of damages to be trebled under the Wage Act was limited to the interest accruing on the delayed payment of wages and accrued vacation time between the date of termination and the date of payment.

The Massachusetts Wage Act requires an employer to pay a discharged employee, such as plaintiff in Littlefield, in full for all earned wages and accrued vacation time on the date of his termination. In 2008, the Massachusetts Legislature amended the Wage Act to impose mandatory treble damages for any and all violations of this statute. Prior to this amendment, judges could exercise discretion in deciding whether or not to impose treble damages, depending upon the employer’s culpability.

Facts and Holding of Littlefield v. Adcole Corp.

Littlefield presents a relatively minor Wage Act transgression for which treble damages likely would not have been imposed before the 2008 amendment. The employer, Adcole, terminated Kenneth Littlefield, its Director of Human Resources, on November 12, 2014. This was not a surprise, as Adcole had given Littlefield at least three weeks prior notice that this would be the effective date of his termination. On his last day of work, Adcole should have presented Littlefield with a check for all unpaid wages he earned through November 12, 2014 (worth $3,228.07), plus 522 hours of unused vacation time (worth $30,090.27). Instead, Adcole made the mistake of processing checks for Littlefield’s unpaid wages and accrued vacation time according to its normal payroll cycle. After Littlefield was terminated, Adcole deposited $1,844.61 into his bank account on November 13, 2014 (i.e one day after his termination) and an additional $1,844.61 was deposited on November 20, 2014 (i.e. eight days after his termination). Adcole processed a check for Littlefield’s $30,090.27 unpaid vacation time on November 23, 2014, and the funds were deposited into his account on November 26, 2014 (two weeks after his termination).

In the midst of Adcole’s processing these payments, Littlefield filed a Wage Act complaint with the Attorney General’s Office on November 18, 2014, which is a statutory prerequisite to filing suit. He did not notify Adcole of his Attorney General’s Office complaint. Perhaps Littlefield rushed to file a complaint with the Attorney General’s Office, thinking that he could thereby automatically turn his unsuspecting employer’s $30,090.27 Wage Act violation into his own $90,270.81 treble damages windfall. After all, the Wage Act clearly provides that: “The defendant shall not set up as a defence a payment of wages after the bringing of the complaint.” Even though Littlefield was paid in full no later than November 26, 2014, he nonetheless proceeded to file suit against Adcole on January 7, 2015, seeking treble damages under the Wage Act.

Adcole did not dispute that it had violated the Wage Act because it failed to pay Littlefield in full on his last day of work. Nor did Adcole contest that Littlefield was automatically entitled to recover his reasonable attorneys’ fees because of the Wage Act violation. Adcole disputed, however, that its Wage Act violation subjected it to liability for three times the amount of the wages and accrued vacation time for which tardy payment was made prior to the filing of Littlefield’s complaint.

Judge Drechsler agreed, holding that Littlefield’s measure of damages was interest that accrued on the principal amount of unpaid wages and vacation time during the two-week delay in Adcole’s payment. While Littlefield argued that the Wage Act prohibited Adcole from asserting a defense based upon payment after his complaint to the Attorney General’s Office, Judge Drechsler held that the phrase “bringing of the complaint” in the Wage Act instead referred only to the filing of an actual lawsuit.

Unanswered Questions For Employers

Littlefield is not an appellate decision, and therefore not constitute binding precedent. The case has since settled, so our Appeals Court will not have an opportunity to affirm or reverse. It leaves several unanswered questions concerning the limits of an employer’s ability to avoid treble damages through a pre-suit tender.

For example, what happens if the employer tenders a check for full payment prior to suit, but the employee refuses to deposit it (thinking that might improve his or her chances of recovering treble damages)? And would the result have been different if Littlefield had provided Adcole a copy of his Attorney General’s Office complaint prior to filing suit? These questions will have to be sorted out by future Superior Court decisions.

What All Employers Must Know

In the interim, Littlefield suggests that, even after the 2008 amendment to the Wage Act, an employer may be able to avoid the harsh sanction of paying three times lost wages by fessing up to a Wage Act violation and making full payment before suit. This does not mean, however, that the employer gets away scot-free after the pre-suit tender. In Littlefield, the employer still was forced to pay the plaintiff’s attorneys’ fees and costs of suit, which can be significant. To avoid the attorneys’ fee award, the prudent employer should always present a discharged employee with a check representing full payment of all earned wages and accrued vacation time on the date of termination.

The eight-page decision is Littlefield v. Adcole Corporatio, et al., Lawyers Weekly No. 12-067-15.The full text of the ruling can be ordered by clicking here.

ANDREW DENNINGTON

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2017-01-13T17:18:35+00:00 August 11th, 2015|Categories: Andrew R. Dennington, Human Resources Compliance, Laws & Regulations, Wage & Hour|0 Comments

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