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Massachusetts Wage Act not exclusive remedy to recover unpaid wages under Massachusetts law

By Ronald Miller, J.D.

The Massachusetts Wage Act was not intended to be the exclusive remedy for the recovery of unpaid wages under Massachusetts law, ruled the Massachusetts Supreme Judicial Court (Lipsitt v Plaud, August 13, 2013, Cordy, R ). Consequently, a museum director could pursue common law, breach of contract, and quantum meruit claims to recover unpaid wages under his employment contract. Moreover, because the employee pleaded sufficient facts to state a claim against an individual defendant on a theory of piercing the corporate veil, he should have been permitted to amend his complaint in that regard.

Employment contract. In 2004, the Franklin D. Roosevelt American Heritage Center was founded to establish a museum to showcase memorabilia focused on President Franklin D. Roosevelt. Just prior to its opening, the plaintiff was offered the position of museum director. The parties entered a written employment agreement. Unfortunately, the Heritage Center experienced financial difficulties from its inception, and the employee never received the full salary due to him under the contract, but continued to work for the museum based on continuing promises that the arrearage would be paid in full. The employee continued to work for the museum through the summer of 2007.

In July 2007, the city of Worcester, which owned the building where the museum was located, decided not to renew its lease and the museum was forced to close its doors. Plans to relocate the museum were never realized, and it never reopened. The employee first filed a complaint with the Attorney General, who was able to settle various Wage Act complaints against the museum. He was also issued a right-to-sue letter.

Thereafter, the plaintiff filed suit against the American Heritage Center and its president for failing to pay approximately $117,500 in compensation he claimed was owed under his employment contract. The complaint asserted claims for breach of contract, quantum meruit and violations of the Wage Act, G.L. c. 149, Secs, 148, 150. Reasoning that the Wage Act was the exclusive remedy for the recovery of unpaid wages, thereby preempting the employee’s common law claims, the trial court dismissed all but the claim under the Wage Act. The trial court also ruled that because Wage Act claims are subject to a three-year statute of limitations, the employee’s potential recovery would be limited to wages earned but unpaid during the three-year limitations period preceding the filing of the suit. The employee appealed the dismissal.

Comprehensive statutory scheme. On appeal, the Massachusetts high court disagreed with the trial court’s conclusion that “in enacting the Wage Act, the legislature created a comprehensive vehicle for recovering unpaid wages,” and accordingly, intended to preempt the employee’s common law claims. Despite the comprehensive nature of the Wage Act in its current form, the high court noted that there was no indication of legislative intent to preempt the common law. Consequently, the high court concluded that it must decide whether the common law remedy was preempted by “necessary implication.”

Common law claims. First, the high court noted that the right of an employee to sue for breach of contract arising from the nonpayment of wages is so long-standing and fundamental that it requires no citation. The employee’s claim breach of contract did not depend on proving a violation of some statutorily created right, and his claims for unpaid wages due him in an employment agreement were cognizable well prior to the creation of the Wage Act’s private right of action in 1993. In fact, for much of the Wage Act’s existence before then, an employee’s principal recourse for the nonpayment of wages would have been to file a contract action. Thus, the high court concluded that had the legislature intended to abrogate these long-standing common law causes of action, it would have done so explicitly.

Further, the minimal practical impact that the continued existence of a common law right to recover unpaid wages will have on the enforcement scheme established by the Wage Act also supported the conclusion that the Act did not preempt the common law by necessary implication, declared the court. The court disagreed with the employer’s contention that the continued existence of a common law cause of action would frustrate the purposes of the Wage Act’s requirement that employees report a claim to the Attorney General’s office before proceeding to court. The reporting requirement was intended simply to ensure that the Attorney General received notice of the alleged violations, so that she may investigate and prosecute such violations at her discretion, explained the court.

Moreover, the fact that an employer whose Wage Act liability for treble damages has been extinguished will nonetheless be exposed to simple contract liability for an additional three-year period was consistent both with the public policy objectives underlying the Wage Act and the status of an employment contract as a contract like any other. Given the strong presumption against implied abrogation of the common law, where an employee’s Wage Act claims are time barred, the court saw no good reason why an employee that cannot seek to recover those unpaid wages by bringing a contract claim. Accordingly, the high court reversed the judgment of the trial court.