Employers – Pay Your Employees Timely or Be Prepared to Pay the Price

Employers – Pay Your Employees Timely or Be Prepared to Pay the Price

In a recent, precedent setting decision, the Supreme Judicial Court of Massachusetts has determined that Employers who are subject to the Massachusetts Wage Act must pay treble damages (i.e. 3 times the original amount owed to the employee) in the event that the employer fails to pay the employee in a timely manner as stipulated by the Act.

Furthermore, the Court ruled that employers who are subject to the Massachusetts Wage Act are liable for treble damages immediately upon the occurrence of a late payment to an employee – regardless of whether or not a complaint has been made and regardless of whether or not the late payment is remedied before the issue is reviewed and ruled upon in the event of an employee complaint. Previously, if an employer paid an employee late, once a complaint was filed, the employer was only obligated to pay treble on the interest that had accrued during the delay.

What Does This Mean for MA Employers?

Of particular concern for MA employers is how this impacts the process for involuntary terminations. When an employee is involuntarily terminated from employment in MA, all wages due to that individual must be paid to them (including accrued paid time off) on the date of termination. Due to the rules around the due date of the final paycheck for involuntarily terminated employees, it might be wise for MA employers to consider suspending such employees (probably with pay), while the final paycheck details are figured out, before actually terminating them.

For all employers, this issue also reminds us of how important it is to have clearly defined and cleanly executed paid time off accrual policies, and great clarity around all manners in which employees could be compensated. Achieving greater clarity by displaying accurate accrued time off balances on every pay statement, and clearly defined compensation and benefits details for every staff person (either in their own employment agreement, or generally, in your employee handbook), the easier it will be for HR and Payroll to make certain that final payments are processed timely to all terminated employees, regardless of cause.

Checkmate can help to ensure that you do not suffer the pain of needing to pay treble wages to your former staff members.