Superior Court Judge Holds LLC Managers Can be Liable under Wage Act

Refusing to follow the lead of a fellow jurist, a Suffolk Superior Court judge ruled in June that managers of Massachusetts limited liability companies cannot escape personal liability under the state’s Wage Act by virtue of the corporate structure through which they may work. While agreeing that the Act’s presumption making corporate presidents liable as employers does not apply to LLC managers, the judge nonetheless refused to dismiss an individual liability suit for failure to pay wages to an employee. The Act, the court concluded, imposes liability on any “person” who violates it, and LLC managers can thereby be liable parties if they qualify as as employers who fail to pay wages due.  The decision contrasts with one entered in May 2011 by a different superior court judge. In that case, the court concluded that LLC managers stand in wholly different shoes from corporate presidents. Because the Wage Act speaks in specific terms about the latter group’s liability and not the former’s, a plaintiff employee could not impose personal liability on LLC managers in the same fashion. The decision was surprising when issued, and it appeared to be only a matter of time before a judge sitting in a separate case would read the Wage Act differently. Holding corporate presidents personally liable for failing to pay wages while permitting the same conduct by a company’s manager to go unpunished seems, after all, to be a clearly unintended and wholly unreasonable reading of the law.  See July 5, 2011 Posting on this Web Site.

While disagreement over personal liability issues is now patent in the court system, the overall implications of the Wage Act remain clear. It requires employers to pay their workers all money they earn within specific time frames. Commissions constitute wages under appropriate circumstances, as does pay in lieu of unused vacation time. Violations of the Act are punishable by automatic tripling of the damages amount, the award of legal fees and costs of suit and, in extreme cases, criminal sanctions.