Employers Must Pay Wages on Date of Termination or Be Automatically Liable for Treble Damages for Late Wage Payments

On April 4, 2022, in Reuter v. City of Methuen, the Massachusetts Supreme Judicial Court (SJC) held that employers are strictly liable for treble damages for making late wage payments, even when an employee has not yet filed suit asserting a wage claim.

The City of Methuen discharged Reuter. When terminated, she had accrued $8,952.15 of unused vacation time. The City failed to pay her for this accrued vacation time on the date of termination, but rather paid her the full amount approximately three weeks later. The city also paid Reuter an additional $185.42, representing trebled interest for the three weeks between her termination and when the City paid the accrued vacation time. Prior to this decision, the prevailing view was that paying three-time the interest satisfied the employer’s obligation under the Wage Act for late payment of wages before the employee made a claim.

If the court finds malicious intent to harm, it may award up to three times the actual damages, along with court costs and reasonable attorney’s fees.

The SJC held that the City’s pre-suit payment of both the plaintiff’s unpaid, accrued vacation time and trebled interest were “late payments constitute[ing] clear violations of the statute.” Quoting the Massachusetts Wage Act, the SJC explained that under the statute “any employee discharged from employment … shall be paid in full on the day of his discharge.” The SJC rejected the notion that an employer could avoid liability for treble damages by paying the wages owed, plus trebled interest on the unpaid amount at a later date.

The Reuter decision makes clear that an employer is obligated to immediately pay an employee – on the same day of discharge in the case of an involuntary termination – all wages, including accrued, unused vacation time. If an employer does not timely pay these wages, the employer will be liable for automatic treble damages and interest on the unpaid amount even if the amounts are paid later. As recognized by the SJC, if an employer is not prepared to pay the wages for any reason including the need for calculations to be done, the employer should initially suspend, rather than terminate, an individual’s employment until the employer can comply with the Massachusetts Wage Act.

If you have any questions regarding the foregoing decision, or Wage Act compliance in general, please contact attorneys Michael Bednarz or Robert R. Berluti.

Employers Must Pay Wages on Date of Termination or Be Automatically Liable for Treble Damages for Late Wage Payments

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