Posts Tagged ‘Massachusetts Wage Act’

Federal court says Massachusetts wage/hour laws may apply to employees who perform work in other states

Wednesday, June 16th, 2010

The United States District Court for the District of Massachusetts has held that a Massachusetts company may be liable under the Massachusetts Wage Act for failing to pay overtime to an employee, even though that employee worked in the company’s Connecticut facility.

The Plaintiff, James Gonyou, worked as a technician and, later, a technician supervisor for Tri-Wire Engineering Solutions, Inc., a Massachusetts telecommunications company that provides tech services throughout New England. On January 5, 2009, Gonyou became a technician supervisor at Tri-Wire’s Danbury, Connecticut facility. On December 14, 2009, Gonyou filed a lawsuit in Massachusetts against Tri-Wire claiming that he had worked approximately 350 hours of overtime between January and July of 2009 and that Tri-Wire had not paid him overtime pay for those hours. Gonyou claimed that Tri-Wire’s failure to pay overtime violated both the Fair Labor Standards Act and the Massachusetts Wage Act.

Tri-Wire filed a motion to dismiss Gonyou’s claim under the Massachusetts Wage Act, arguing that the Massachusetts Wage Act did not apply because Gonyou worked in Connecticut. The court, disagreed, however, noting that the language of the Massachusetts Wage Act refers to the location of the employer, not the employee:

no employer in the commonwealth shall employ any of his employees in an occupation…for a work week longer than forty hours, unless such employee receives compensation for his employment in excess of forty hours at a rate not less than one and one half times the regular rate at which he is employed.

(emphasis added.)

The court decided that this language would be interpreted most reasonably to apply to any Massachusetts corporation that employs individuals both in Massachusetts and elsewhere, and the court did not find that applying Massachusetts law in this situation would be unfair to Tri-Wire.  Accordingly, the court allowed Gonyou to proceed with his Massachusetts overtime claims against Tri-Wire.  Gonyou v. Tri-Wire Engineering Solutions, Inc., D. Mass., 2010.

Of course, even if the court had dismissed Gonyou’s Massachusetts overtime claims, Gonyou still could be entitled to overtime pay under the FLSA; so why bother dismissing the Massachusetts claims?  Because, unlike the FLSA, employers who are found to have violated the Massachusetts Wage Act are automatically required to pay triple damages to employees who are owed overtime or other wages.  The district court’s decision suggests that Massachusetts employers who make wage payment errors will be forced to pay triple damages for those errors, even if those errors were made with respect to employees who don’t work in Massachusetts.

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Massachusetts Attorney General’s Office Reaches Settlements in Four Wage Hour Cases Involving Restaurant Delivery Companies

Sunday, February 7th, 2010

Simultaneous with the launch of the IRS’s new initiative on worker misclassification, Attorney General Martha Coakley’s Office announced, just this past week, that it reached settlements in four separate misclassification cases. In each of these cases, the Attorney General’s Office claimed that restaurant delivery companies had misclassified their drivers as independent contractors when they should have been classified as employees. Because of this misclassification, the Attorney General’s Office opined that these workers were deprived of certain wage/hour protections as well as other benefits that employees enjoy, such as unemployment insurance, workers’ compensation benefits and health insurance.

Beginning last June and continuing into the present, the Fair Labor Division of the Attorney General’s Office has ramped up its enforcement efforts, particularly with regard to misclassification. Specifically, the Attorney General’s Office has targeted various meal delivery companies in Massachusetts, focusing their investigations on the companies’ classification of workers.

The companies under investigation may have decided to settle their cases with the Attorney General’s Office to avoid the extremely steep penalties misclassification creates. Indeed, misclassification leads to the automatic imposition of triple damages under the Massachusetts Wage Act regardless of whether it was deliberate or accidental.

To read the AG’s full press release, click here.

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Wage War on the Wage Hour Class Action Before Getting Slammed

Thursday, December 3rd, 2009

$40 million. $14 million. These figures represent only two examples of the massive expense wage/hour class actions can be for employers. And, these two figures only represent the settlement amounts for these cases and do not account for the time and costs associated with defending them. In light of that, these two figures should serve as two good reasons why employers need to be proactive when it comes to wage/hour issues. Although employers can never stop disgruntled employees from waging wage/hour or other claims against them, they can take various steps to wage war on them by putting themselves in the best defensive posture that they can be in. And, one good way to do that is through a wage-hour audit.

Unfortunately for employers, wage/hour class action lawsuits have become increasingly popular over the last ten years and continue to be on the rise around the country. No employer is immune from them, not even the Salvation Army. In fact, a class of 28,000 employees filed a wage/hour lawsuit against the Salvation Army in California claiming that their former employer denied them meal breaks and did not pay them overtime.  The case was ultimately settled for $12 million in August 2009.

The two multimillion figures listed above for $14 and $40 million both arose out Massachusetts. Today, the Boston Globe proudly boasted on its front page: “Wal-Mart will pay $40m to Workers.”  To access the Globe’s article, click here.

Within the article, the Globe also noted that Lenox, Massachusetts employer Canyon Ranch paid out $14 million as part of a wage/hour settlement with its employees last year. With regard to the Wal-Mart class action, the case itself was filed back in 2001 and, now, over eight years later, has just been resolved. With a class of about 67,000 employees and, similar to the Salvation Army class action case, the employees asserted that Wal-Mart violated wage/hour law by denying them meal breaks, failing to pay them overtime and otherwise not paying them for all of the hours they worked.

What the Globe barely acknowledges is that Wal-Mart’s decision to settle was very likely for business reasons due to mounting litigation costs in a case with a class of 67,000+ plaintiffs and was not a decision that implied any liability. In fact, the article fails to explore the possibility of former employees jumping on the lawsuit bandwagon hoping for a lottery win at the end of the day.

As employers, we are all too aware of that mentality, which is why it becomes critical to reduce the risk of employment-related lawsuits. Many of these wage/hour class action cases have repeated themes, the most popular ones being as follows: failure to provide meal breaks, failure to pay overtime; failure to pay for “off the clock” time; and failure to pay tips.

Because wage/hour litigation continues to be on the rise and is very costly to defend, especially in Massachusetts due to the triple damages’ statute, employers should have their employment law counsel conduct a wage/hour audit to ensure that workers are properly classified, that overtime is properly calculated, that there are not improper deductions taken out of an employee’s pay and that supervisors and managers are being properly trained.

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Learning the Hard Way: the SJC’s recent reminder that worker misclassification costs big bucks

Saturday, September 12th, 2009

If it looks like a duck and quacks like a duck, guess what – it is a duck.  This means that you can’t try to call it a fish, because it just isn’t.  This old adage so aptly describes situations where workers are misclassified as independent contractors when they really are employees.  No matter how much an employer wants to call them an independent contractor, if they do not meet the independent contractor test, they are just not one, period.

Misclassification, even when unintentional, leads to violations of several different laws and exposes employers to massive liability.  In fact, one of those laws – the Massachusetts Wage Act – provides for triple damages regardless of whether the violation was deliberate or accidental.  The Massachusetts Supreme Judicial Court’s (“SJC”) recent decision in Somers v. Converged Access, Inc. serves as an important reminder that the independent contractor statute is meant to be a strict liability statute.

In this case, Somers, who had unsuccessfully applied for employment with Converged Access, Inc. (“CAI”) on two occasions, was ultimately hired as an independent contractor, doing work similar to that of CAI employees.  As an independent contractor, Somers did not receive employee benefits, such as time off from work, health insurance or retirement benefits, and Somers did not receive overtime pay when he worked more than 40 hours per week. CAI did not withhold taxes from Somers’ pay or pay workers’ compensation and unemployment insurance on behalf of Somers.  CAI did, however, pay Somers significantly more money as an “independent contractor” than it ever would have as an employee.

When CAI chose not to renew Somers’ contract, Somers filed suit under the Massachusetts Wage Act, claiming that, as an independent contractor, he did not receive the wages and benefits that CAI employees had, such as overtime pay and vacation time.  In response, although CAI did not dispute that Somers was incorrectly classified, it argued that because Somers was earning substantially more money than its employees and was, in fact, paid more money than any overtime he would have earned, Somers did not suffer any damages.  Further, CAI claimed that it would have paid Somers far less if he had been an employee.  Accordingly, CAI argued that it should be allowed an “off-set” for the salary it would have paid Somers if he was an employee against the much larger amount it paid him as an independent contractor.

Although the trial court agreed with CAI’s argument, the SJC did not.  In fact, the SJC noted that the legislative intent behind the independent contractor statute would be contravened by allowing such an off-set and reasoned that “[w]ere employers who violated the statute permitted a ‘safe harbor’ that allowed them to demonstrate that they would have paid the employee less had they known he or she was not an independent contractor, there would be no financial incentive to ensure employer compliance and employees would be left with no meaningful protection from misclassification.”  Thus, the SJC determined that it was clear that the independent contractor statute was written to impose strict liability on employers.

The case was remanded to the trial court for a determination on damages.  Because the SJC found that CAI had misclassified Somers, Somers will be able to recover triple the damages.  It will be the trial court’s job to determine exactly what damages were incurred by the misclassification, which will include any wages, overtime pay and benefits that Somers was denied because of his misclassification.

Showing independent contractor status is very difficult and entails overcoming Massachusetts law’s presumption of employment.  This case serves as a very important reminder to Massachusetts employers that there are extremely tough penalties for misclassifying workers as independent contractors.

To read the SJC’s full decision, click on the following link: http://www.sociallaw.com/slip.htm?cid=19358&sid=120

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