The Massachusetts Supreme Judicial Court just made it even tougher for employers to avoid the broad implications of the state’s Wage Act. Given that law’s special provisions, it concluded, its terms cannot be waived by a general release from a departing employee unless the law is specifically mentioned and the waiver is “stated in clear and unmistakable terms.” A release of Wage Act claims “must be plainly worded and understandable to the average individual, and it must specifically refer to the rights and claims under the Wage Act that the employee is waiving.”
The decision could have broad implications in the severance arena, where employees commonly are paid a specific sum in exchange for waiving “any and all claims” they may have against their employers. In many cases, the release language in these agreements does not specifically address the Wage Act, at least not to the degree that may now be required. Part of the problem here is the difficulty discerning precisely what words will be sufficient going forward. Is mentioning the “Wage Act” or Mass. Gen. L. ch. 148″ sufficient? Or are employers required to both reference the law and describe its provisions to employees in detail? Cautious employers should do the latter to be sure employees cannot later say they did not understand what they were doing. The likely result, of course, is overly broad, wordy waivers drafted by lawyers. Still, it’s better than finding out after the fact that a claim you paid to have waived is staring at you from the other side of a lawsuit.