As I mentioned in some of my prior posts, the Massachusetts Weekly Payment of Wages Act (“Wage Act”) poses many challenges to employers due, in part, to the vagueness of its terms, the strict liability it imposes on employers (and individuals having management of the company), and the threat of treble damages and attorneys’ fees. One thing is clear, however: commissions are considered “wages” under the Wage Act if they are “definitely determinable” and have become “due and payable.” While many in-house counsel and employers are aware of this, they mistakenly assume that their company can avoid violating the Wage Act if the company’s commission plan states that commissions are payable: (a) only if the employee is employed at the time the employer decides to pay them, or (b) only at the employer’s discretion. As Prudential Insurance Company of America recently found out, however, simply including such a clause may not provide enough protection if the plan does not clearly address when commissions are “definitely determinable” and when they are “due and payable.”
Prudential had an elaborate nine-page document outlining its Regional Coordinators’ Sales Compensation Plan. One of its long-time employees, Christopher McAleer, claimed that he was terminated … Keep reading
Before last week, a non-Massachusetts employer could insulate itself from employee claims under the Massachusetts Weekly Payment of Wages Act (“Wage Act”) simply by having its employees agree that all employment disputes be litigated in the employer’s home state. That all changed with the Massachusetts Supreme Judicial Court’s decision in Melia v. Zenhire, Inc.
In that case, plaintiff Edward Melia, who worked and lived in Massachusetts, challenged the validity of a forum selection clause contained in his employment agreement requiring that any disputes related to his employment be litigated in New York. Melia’s claims against Zenhire included claims for unpaid wages, unpaid vacation and sick day wages, severance pay and unreimbursed expenses. Melia argued that the forum selection clause was a “special contract” prohibited by the Wage Act and against Massachusetts public policy. The SJC disagreed, determining that, due to comity amongst state courts, and in light of most states’ choice of law rules, there is a presumption that other jurisdictions would apply laws such as the Wage Act. As such, there was no public policy reason to invalidate a forum selection clause in an employment agreement.
The SJC did leave one opening for employees in this regard, in … Keep reading
As summer internship season approaches, employers should carefully institute internship programs which comply with the requirements of the Fair Labor Standards Act (FLSA).
In the case of “for-profit” companies, unpaid internships must meet the strict criteria of the FLSA. Specifically, as stated in U.S. Department of Labor’s (DOL) FLSA Fact Sheet #71 unpaid interns must:
- Receive training similar to that provided in an educational environment
- Be for the benefit of the intern, and not the employer
- Not displace regular paid employees
- Be closely supervised by existing staff
- Not be used for the immediate advantage of the employer (and in some cases, may impede the employer’s operations)
- Not necessarily be entitled to a job after the end of the internship
- Understand that the intern is not entitled to wages for time spent in the internship
… Keep reading
Even the most sophisticated employer in the most intellectually demanding industry may misclassify its workers as “exempt” when they are, in fact “non-exempt.” The increasing number of misclassification litigation is a sure sign that no one is completely immune from inadvertently misclassifying workers.
What exactly are the workers “exempt” from anyway? The federal Fair Labor Standards Act (FLSA) requires that workers be paid a minimum wage for every hour they work and an overtime premium for any hours in excess of 40 hours worked in a week, but it permits employers from excluding certain types of employees from each of these requirements; hence, they are “exempt” employees. The most common areas of exemption are known as the “white collar” exemptions. These exempt employees are:
Of course, these “white collar” classifications may appear straightforward, but like the roads in the Tuscan hillside, they can become quite foggy and have twists and turns from time to time. Don’t fall for the typical myths about exempt classifications.
Myth No. 1: If the employee is paid a “salary” rather than “hourly,” the employee must be “exempt.”
Although any employee who is paid on an “hourly” basis … Keep reading
Most employment claims can be avoided by simply being aware of what the law requires. Here are three recurring issues which plaintiffs’ class action attorneys and government agencies are targeting across the country and which can be easily avoided by taking action now.
1. Misclassification of Workers as Independent Contractors
The Internal Revenue Service (IRS) and US Department of Labor (US DOL) have been increasingly cracking down on independent contractor misclassification. Last year, Massachusetts, along with several other states, signed a Memorandum of Understanding (MOU) with the IRS and DOL, formally agreeing to cooperate in investigating independent contractor misclassifications. If a violation occurs, the government agency investigating the matter is obligated to report it to the other state and federal agencies which may be affected by the misclassification, potentially opening up the company to an audit by the IRS or the US DOL.
Massachusetts has one of the toughest tests to be met in order to classify someone as an independent contractor, and the penalties for misclassifying vary with the legal requirement which was not met as a result of the misclassification. For example, if a worker was not paid accrued wages or vacation time upon termination, the … Keep reading