The Massachusetts Wage Act
Why the Wage and Hour Laws Matter to You
It is a basic promise of employment that you will be paid the wages you earn. Massachusetts law enforces this obligation strictly through its wage and hour laws. The primary wage law is called the Massachusetts Wage Act.
More often than you might think, employers violate the Wage Act. This can be by not paying wages on time or not paying earned commissions. It can result from taking unauthorized deductions from a paycheck. It can also result from classifying someone who should be an employee as an independent contractor. Learn more about the 10 most common wage and hour violations in Massachusetts.
Whether an innocent mistake or intentional wage theft, this can result in serious exposure for the employer.
If an employer violates the Wage Act, Massachusetts law requires that they pay treble damages. That means a $1,000 mistake in failing to pay for a week's vacation could become a $3,000 liability. The law also requires that the employer reimburse the employee for attorneys fees and costs if the employee wins a wage claim.
It is easier than you might imagine to violate the Massachusetts Wage Act. Below are the basic requirements that both employers and employees should understand.
Timely Payment of Wages
Massachusetts employers must pay all workers within six days of the end of the payroll period. Most employees have to be paid weekly or bi-weekly, though there is are limited categories of employees who may be paid monthly if they agree.
This time period varies from state to state. For that reason, out of state businesses with Massachusetts employees frequently overlook this requirement. It is also sometimes an issue for commission-based employees who are paid commissions monthly or quarterly.
Payment of Wages, Commissions and Vacation on Termination
If an employee is fired, he or she must be paid on that same day for all amounts due and payable. This includes all wages earned before termination and any earned commissions. It also includes payment for any vacation time the employee has accrued but not used.
If the employee resigns voluntarily, these amounts must still be paid, but can be paid in the next scheduled payroll.
If you do not properly pay wages at termination, you could face a claim under the Wage Act for unpaid wages.
If you are waiting for an employee to consider a severance agreement, do not wait to issue their final paycheck. We have seen many employers make this mistake and turn an otherwise completely lawful termination into a lawsuit.
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Deductions from Wages
With some very limited exceptions it is unlawful for an employer to deduct money from an employee's paycheck. You can deduct for income taxes, union dues, and health or other benefit premiums. You can also deduct pursuant to a valid garnishment order. Outside of these, you may run into a Wage Act violation for deducting from an employee's paycheck. This could be the case even if you have a repayment agreement with an employee or if the employee damages property.
Payment of Commissions Under the Wage Act
Commissions are considered wages under the Wage Act. A commission is an incentive payment based on the employee's contribution to revenue. For example, a sales person who is paid a percentage of each sale is receiving a commission. Discretionary or profit-based bonuses are not commissions and not subject to the wage law.
Commissions are often paid less frequently than regular wages. This can cause problems on termination. If a terminated employee earned a commission prior to termination, this should be included in their final paycheck.
Independent Contractors Under the Wage Act
The Wage Act applies to all employees in Massachusetts. Sometimes employers try to avoid these requirements by hiring people as independent contractors instead of employees. The Wage Act also contains very specific and strictly enforced criteria for when this is permissible. If you employ an independent contractor who should have been classified as an employee, you may be in violation of the Wage Act.
The Massachusetts Earned Sick Time Law
The Wage Act now requires that all employees accrue sick time, whether they are part time or full time and regardless of the size of the employer. If a business has fewer than 11 employees, they do not have to pay for the sick time but they still must allow it. If you have 11 or more employees the sick time must be paid. All employees accrue one hour of sick time for every 30 hours worked, up to a maximum of 40 hours. Unlike vacation time, you do not have to pay for unused sick time at termination.
How is the Wage Act Enforced?
The Massachusetts Attorney General has authority to enforce the provisions of the Wage Act. An employee who is owed wages under the act can also bring a private lawsuit. The employee must first file a complaint with the Attorney General's office, which will provide a right to sue letter on request.
The Attorney General can decide to investigate a complaint at any time. Most commonly, however, it will leave it to the employee to pursue a remedy in court. Remember that if the employee does bring a private lawsuit and wins, the employer will have to pay not only triple damages but the employee's attorneys fees as well.
Employers should remember that it is unlawful to take action against an employee for complaining about nonpayment of wages. Read more about responding to an employee complaint about wages and pay.
How We Can Help
We can help you navigate these issues and get clarity on your rights and obligations as an employer or an employee. You can use the button below to schedule a call back from a member of our team, give us a call at 781-784-2322, or fill out our web form to let us know a little more about your situation.