Massachusetts Wage Act Now Imposes Mandatory Treble Damages
As of July 13, 2008, Massachusetts employers will face automatic treble damages (tripling the monetary amount of any damages awarded) for any violation of the Massachusetts Wage Act. The newly amended Act, passed by the Legislature on April 15, 2008, will become law despite opposition from Governor Deval Patrick, who feels that the imposition of such potentially crippling penalties might unfairly harm those employers who violate the Act in good faith.
Prior to passage of this amendment, treble damages were generally awarded only if an employer’s conduct was found to be willful or egregious. Beginning July 13, 2008, employers will not be permitted to present evidence of intent if the court finds the employer liable for violating the Act. This means that employers will be held liable for treble damages, to be paid to prevailing employees, even for unintentional violations of the Act.
Accordingly, we urge Massachusetts employers to audit their compliance with all of the requirements of the Wage Act in order to avoid the risk of owing treble damages to prevailing employees. We recommend a compliance audit of the following topics, at a minimum, that is completed prior to July 13, 2008:
- Are employees earning the minimum wage under Massachusetts law?
- Are employees classified improperly as exempt when they should be non-exempt?
- Are workers improperly classified as independent contractors when they should actually be employees?
- Are employees receiving proper meal and rest breaks?
- Are commission plans, policies and practices in compliance with Massachusetts law and implemented lawfully?
- Are non-exempt employees being compensated for all overtime hours (which may include holidays and weekends) at the proper corresponding overtime rate?
- Are employees being paid in a timely manner?
- Are employees being paid for all time actually worked?
- Are service employees receiving tips as required by law?
Although penalties for violations of the Act can be costly, employers can avoid such expenses by meeting the requirements of the law. In this vein, we also recommend a thorough review of all relevant employee handbook policies as well as job descriptions.
Massachusetts employers have been experiencing an increase in the number of wage and hour claims, even before the new amendment to the Wage Act, as well as a significant increase in the number of class action wage claims filed in Massachusetts. Given that a $10,000 claim will now automatically be a $30,000 claim, this is a great time to ensure compliance.
As always, we are available to assist you with a wage and hour compliance audit as well as otherwise complying with the Massachusetts Wage Act.