If you own a small business and have employees, you must make sure they are properly paid on time. The Massachusetts Wage Act, G. L. c. 149, § 148 (“Wage Act”), sets forth deadlines for timely payment for employees, including those discharged from employment.
If you fire an employee and neglect to pay them, you can be responsible for three times the interest on the late payment as a penalty (even if it was a good-faith mistake) and three times all late wages. The change comes following the Massachusetts Supreme Judicial Court’s ruling in Reuter v. City of Methuen, No. SJC-13121 (Mass. April 4, 2022). In its opinion, the SJC held that the Wage Act calls for treble the late-paid wages and that “The statute leaves no wiggle room” for excuses or defenses. If an employer is late in their wage payment or has a mistake, employees are entitled to 3x lost wages.
This rule has severe implications for employers. If you have employees, ensure that your payroll is correct and in compliance with all Wage Act deadlines (I suggest having Solex assist you in all HR needs).
If you terminate an employee, pay them in full when you do so. If you have to terminate an employee on the spot for misconduct, even if the misconduct is illegal or otherwise harmful, consider suspending them for a short period of time until you can comply with the wage payment requirements.
Ultimately, employer-employee relationships have specific legal requirements that, if not followed, may lead to severe and significant consequences for employers. I am happy to help advise on a particular employment matter, including terminations. Please feel free to reach out.
(co-authored by Rohan Vakil)