In a surprising decision early this month, a superior court judge entered an expansive reading of the Massachusetts Wage Act that brings severance pay into the law’s ambit. If the thinking of Justice Dennis Curran is adopted by other judges or affirmed by the state’s appeals courts, it will leave employers who don’t make severance payments exposed to the Wage Act’s mandatory triple damages provision, its provision for individual management liability, and its requirement that defendants pay winning plaintiffs for all legal fees they expend.
Justice Curran’s decision came as a surprise because it has been largely accepted among employment lawyers that severance pay issues are not covered by the Wage Act. That law, which requires employers to pay their workers all wages they earn, including commissions, within specific and narrow time frames, appears on its face to apply only to money that an employee earns by appearing at work and performing job duties for his/her employer. Severance pay generally does not fit this description, coming as it does after an employee is terminated or quits and, therefore, after he/she stops coming to work. What’s more, severance is usually conditioned not on work performance but on a waiver of an employee’s rights to sue and other undertakings that have little to do with working. Apparently recognizing these distinctions between severance pay and wages, the state’s Appeals Court — a higher legal authority whose rulings must generally be followed by superior court judges — has already concluded that severance pay is not subject to the Wage Act’s strict penalty provisions. [Read more…]