Be Prepared to Pay All Wages and PTO on the Day You Terminate An Employee – No Matter What the Reason For Termination
Under the Massachusetts Wage Act, M.G.L. c. 149 § 150, a terminated employee is entitled to be paid all wages, including accrued vacation time, on the day of termination, and the failure to do so makes the employer liable for mandatory treble damages and attorneys’ fees. As the Supreme Judicial Court recently ruled in Reuter v. City of Methuen, while this rule may seem harsh and offers no “good faith exception,” that is what the legislature intended. Indeed, Reuter is a cautionary tale from which in-house counsel should take note.
After having worked for the City of Methuen for 25 years, Beth Reuter was convicted of larceny, prompting the City to terminate her employment. At the time of her termination, Reuter was owed $8,952.15 for accrued vacation time, which the City did not pay until three weeks later. Eventually, Reuter’s counsel noted that the City’s conduct violated the Wage Act and demanded triple the accrued vacation pay and attorneys’ fees (less the $8,952.15 already paid). Reuter filed suit, and the City took the position that because it paid the accrued vacation amount before any demand had been made and prior to the lawsuit being filed, the most for … Keep reading