SJC Settles Wage Act Question: LLC Managers are Liable just like Anyone Else

In a decision that many employment lawyers saw coming, the Supreme Judicial Court declared on June 13 that managers of  limited liability companies are personally liable under the Massachusetts Wage Act if they substantially participate in formulating financial policies. The ruling puts to rest any doubts on this issue that arose after a justice of the superior court ruled in 2011 that, because the Wage Act does not specifically mention LLC managers but does say that corporate presidents and treasures can be held personally liable, the managers are exempt.

The lower court decision had already been contradicted by at least two other superior court judges, who read the Act’s broad liability language to cover LLC managers despite the reference to corporate officers, a reference that was added to the law in 1932 at a time when LLCs did not even exist. Noting this point and other liability referneces in Chaper 149, Sections 148-150, the SJC made relatively short work of the issue. It seemed to consider the point that LLC managers are liable if they make decisions that violate the Wage Act to be a rather obvious one. To rule otherwise, it seems, would irrationally create an easy route to avoid the law’s requirement that employees be paid the wages they earn on the job.

“We do not read these provisions of G.L. c. 149, § 148, as a legislative effort to single out for individual liability only the officers or managers of the specific types of entities mentioned in the statute. Rather, the inclusion of the provisions on corporate officer liability and public officer liability serves to illustrate the circumstances in which an individual may be deemed a ‘person having employees in his service’ under G.L. c. 149, § 148,” the court held. The case is Cook v. Patient EDU, LLC.