At its most basic level, the purpose of the Wage Act is to ensure the employees are promptly paid by their employers. Specifically, employers must generally pay their employers wages within six of the end of the applicable pay period. While paying one’s employees is generally a sound business practice, the law includes harsh penalties for employers who fail to comply.
Below are a few questions commonly asked by employers:
(1) Is it a wage?
This question appears simple but can be more complex: what is a wage? The Wage Act itself does not fully define what constitutes a wage. The term “wage” clearly includes money paid by an employer to an employee in exchange for working. The Wage Act specifically includes “holiday” and “vacation” pay, as well as “tips”. The definition of wages, however, does not include severance, and does not include bonuses unless the bonus was non-discretionary. Commissions (such as sales commissions) are a separate category but still are considered wages once they are “definitely determined” and “due and payable.” When in doubt, any moneys owed to an employee should be promptly paid by the employer.(2) Do I have to pay overtime?
Employers are required to classify their employees as either “exempt” or “nonexempt”, a classification that has ramifications under both the Massachusetts employment laws and the federal Fair Labor Standards Act. All employees are nonexempt unless they fall into a certain categories, based on their job functions. In general, only executive, professional, and sales employees will be considered exempt, and employers must be very careful in making this determination. “Nonexempt” employees who are required (or permitted) to work more than 40 hours in a one week must be paid “time and a half” for all hours worked over 40. For example, if an employee earns $8/hour, then all hours after 40 in one week must be paid at the rate of $12/hour. Although overtime is not addressed in the Wage Act, failing to pay overtime is considered a Wage Act violation.(3) Do I have to provide breaks?
Massachusetts law requires that employees who work more than 6 consecutive hours in one day are entitled to a 30-minute break. In that break, the employee must be allowed to leave the office and have no work responsibilities. Employees are permitted to waive the break requirement, but if the employee makes that waiver, they must be paid for that time. In sum, it is important for all employers, but particularly those with hourly employees, to make sure that employees are either provided breaks or clearly waive that right (and are then paid accordingly).(4) Deductions from Paychecks
Generally, employers may only deduct taxes (federal and state) and a few other deductions that are required by law. In a circumstance where an employee owes money to an employer, the employer must not deduct what is owed from the paycheck. The law does allow for a “valid set-off” with respect to certain moneys owed, but that only applies to a few select circumstances. When in doubt, an employer should always pay the standard wages owed to an employee, and seek to recover any funds owed by the employee separately.(5) Penalties for Noncompliance
The Massachusetts legislature has taken a hard line on employer violations of the Wage Act. Failing to comply with the Wage Act can lead to mandatory triple damages and reasonable attorneys’ fees, which is intended to provide strong incentives to comply. In addition to being able to file a private lawsuit, an employee may also fill out a pre-printed form from the Massachusetts attorney general to seek an investigation into Wage Act violations. Although the attorney general receives many complaints and will not pursue every case, the office will usually conduct an investigation, and an employer must be prepared to explain its wage payment processes.
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