SJC to Decide Key Cost-Shifting Questions under the Massachusetts Wage Act

Expressing uncertainty whether a company’s shifting of business expenses to its employees is actionable under the Wage Act, a federal court judge is asking the Massachusetts Supreme Judicial Court (SJC) to answer three questions:

  1. Does the independent contractor/employee test under the Act determine a worker’s status for workers compensation insurance purposes? The SJC has already held that employers cannot shift this cost to its employees, but the question what constitutes an “employee” for workers compensation purposes is unsettled.
  2. Can an employer contractually bind its employees to pay for equipment such as uniforms and package scanners that are necessary for the performance of their job duties? Indications are that the answer to this question is likely “no,” but the federal court sees tension between two prior Massachusetts cases.
  3. Does the Wage Act ban an agreement under which employees pay a third party vendor for work related vehicle expenses such as maintenance and operation? There is little question that reimbursement for work-related miles must be reimbursed in most or all cases, but there appears to be no statement of law that addresses this particular question.

The SJC’s answers to these questions, which may issue this Spring, are likely to have a significant impact on the employer/employee relationship in Massachusetts. The Wage Act provides for automatic triple damages and the imposition of legal fees against offending employers, so the stakes are high. Some cases now plainly support the notion that the foisting of business expenses such as insurance and automobile costs violates the Act. Under the federal court’s readings of Massachusetts case law, however, answers to the three questions are unclear. Employment attorneys – along with any employer who may now be shifting expenses like those identified above to their workers – will be watching closely for the SJC’s reply to the federal court.