Legal Updates

Out Of Sight, Not Out Of Mind: Massachusetts Wage Act Extends To Salesperson Living And Working Outside Massachusetts

In light of a recent Massachusetts Appeals Court decision, Massachusetts employers should be mindful of potential liability under the Wage Act for unpaid wages, including sales commissions, to employees who reside outside the Commonwealth and who perform their day-to-day sales activities by traveling and telecommuting from other states.  Failing to recognize that Wage Act protection could extend to these remote employees could prove costly for employers and their officers (who, under the Wage Act, may be held individually liable).

Appeals Court’s Decision

In the decision, Dow v. Casale, the Appeals Court affirmed a judgment of more than $300,000 (plus attorneys’ fees) for a Florida-based sales director against the CEO of a Massachusetts-based company.  Applying Massachusetts choice-of-law principles, the Appeals Court determined that Massachusetts had the most significant relationship to the parties’ employment relationship, irrespective of where the plaintiff lived and was physically located from day to day.  As a result, the court concluded it was appropriate and reasonable to apply Massachusetts law to the plaintiff’s claims and to afford him the remedies provided under the Wage Act.

As a result of the Dow ruling, Massachusetts employers should recognize that the potential scope of the Wage Act extends beyond the physical boundaries of the Commonwealth.  In today’s telecommuting world, in which many employees work from locations other than a company’s Massachusetts headquarters or local offices, it is easy for employers to forget the potential costly ramifications of failing to timely pay such employees wages they are owed.  In light of the Wage Act’s mandatory treble damages and attorneys’ fees provisions, an employer’s “out of sight, out of mind” attitude could prove costly.

Recommendations For Employers

As a result of the Dow decision, Massachusetts employers with employees who work out of state are advised to:

• Audit their payroll practices concerning out-of-state employees;
• Consider taking steps to reduce the scope of such employees’ contact with Massachusetts.  For example, an employer might arrange to have customer paperwork generated from out-of-state employees’ work locations, rather than Massachusetts, and instruct employees to use their local contact information on their business cards; and
• Confer with employment counsel concerning compliance with the Massachusetts Wage Act for out-of-state employees.