What Are the Consequences to an Employer who Fires an Employee but Does Not Pay all Accrued Wages on the Final Day of Employment?
The Massachusetts Wage and Hour Act (“Wage Act”) requires employers, when terminating an employee, to pay all accrued and unpaid wages through the last date of employment, on the last day of employment. This includes not only wages, but accrued but unused paid time off.
The Massachusetts Supreme Judicial Court has rigidly interpreted the statute on a number of occasions, and the most recent case is just the latest example of the severe consequences of violating it. In Reuter v. Methuen, 489 Mass. 465 (2022), the employee was terminated because she was convicted of larceny. At the time she was fired, the employee was owed about $9,000 in unused vacation time. Instead of paying the employee this amount on the final day of employment, the employer paid it three weeks later. About a year later, the employer paid triple the interest on the unpaid amount for the three week delay. The employee then sued, claiming that she was entitled to three times the amount of the unpaid wages, not triple the interest, as well as attorneys’ fees. The SJC agreed with the employee.
The lesson to employers is clear. Even if the employee has engaged in wrongdoing and deserves to be summarily fired, the employer can make a bad situation worse by not paying every penny due on the last day of employment. As the SJC noted, because the employer controls the date on which it terminates the employee, it should wait to terminate the employment so it can pay the amount owed on the day of termination, or suspend the employee until the exact amount can be d
- By David Mack