Russell Beck in Lawyers Weekly on Restrictive Covenants

A recent issue of Massachusetts Lawyers Weekly features discussion with Russell Beck in an article titled “Aesthetician can sue ex-employer for tortious interference, 93A.”

The article covers a Massachusetts Superior Court decision concerning a lawsuit filed by an aesthetician against her former employer. The aesthetician alleges that, after she was terminated, her former employer sent her a cease-and-desist letter and contacted third parties to warn them against doing business with her. The aesthetician contends that her prior employer does not have an enforceable noncompete agreement, and that the communications to third parties were false and derogatory. The article was written by Lawyers Weekly reporter Eric T. Berkman.

Massachusetts Lawyers WeeklyAccording to the article, the Bristol County Superior Court Judge, in Macaroco v. Vanity Lab, LLC, et al. (Lawyers Weekly No. 12-040-22), denied the former employer’s motion to dismiss, ruling that the plaintiff’s allegations that the former employer “published false and derogatory statements about the quality of her services to at least one third party, and that it sent the cease and desist letter with the intention of gaining a business advantage over her while knowing the restrictive covenants were unenforceable, were enough to state trade libel and Chapter 93A claims respectively.”

The article quotes Russell Beck as follows:

Boston employment attorney Russell Beck, who handles trade secret and noncompete disputes, said the case provides guidance to employees trying to determine if they should affirmatively sue over attempts to enforce a likely invalid restrictive covenant, or whether they should wait and see if the employer actually follows through with a lawsuit of its own.

“Most times the calculus yields a result where you don’t challenge it and you wait,” he said. “But where, like here, the employer also allegedly went so far as to tell its customers, ‘We’re going to sue this person because they’re violating their covenants and you can’t work with them,’ coupled with a situation where the employee allegedly wasn’t paid appropriately in the first place, you’ve got the makings of a good reason not to wait.”

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For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over thirty years of experience working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (6th ed., MCLE, Inc. 2021), used by other lawyers to help them with their noncompete matters
  • Authoring the book Trade Secrets Law for the Massachusetts Practitioner (1st ed. MCLE 2019), covering trade secrets nationally, with a focus on Massachusetts law
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administering the award-winning blog, Fair Competition Law
  • Establishing and administering the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,660 and 870 members, respectively, around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2020 Chambers USA Guide, which stated that Russell Beck is “an expert in the field of trade secret and restrictive covenant law,” and is also noted for his “ability to adjust and come up with successful solutions.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Penalties for Delayed Payment to Involuntarily Terminated Employees

Massachusetts employers can be liable for treble wages and benefits for any delay in paying terminated employees their final pay. In Reuter v. City of Methuen, No. SJC-13121 (Mass. Apr. 4, 2022), the Massachusetts Supreme Judicial Court (“SJC”) ruled that an employer who fails to make a final payment of earned wages and other benefits to an involuntarily terminated employee on their last day, as required by the Massachusetts Wage Act, must pay three times the amount of wages and benefits owed.

he ruling is a significant departure from how Massachusetts courts previously interpreted that requirement. Previously, relying on lower court rulings, many, if not most, Massachusetts employers believed that an employer making a late final payment would be on the hook for only three times the interest on the late-paid wages, not triple the wages and benefits. Many employers also believed they had a defense to treble damages if they paid the earned wages and benefits before the employee filed a complaint in court. The Reuter decision changes these long-held beliefs dramatically.

A three-week paycheck delay, then a lawsuit.

In Reuter, the city of Methuen terminated an employee after she was convicted of larceny in 2013. At the time she was fired, she had accrued $8,952.15 in unused vacation time. The city paid her that amount three weeks later. Then, one year later, the employee’s attorney sent a demand for $23,872.40: triple the amount of late vacation pay, plus attorneys’ fees, minus the amount already paid. In response, the city paid $185.42: triple the interest accrued at 12 percent for the three weeks the city delayed paying the accrued vacation pay.

The employee sued to recover triple the amount of late wages.

Court awards fired employee triple the amount of her late wages.

The trial judge held the employee was only entitled to treble the interest, accrued at 12 percent, for the three-week delay in receiving her vacation pay, plus attorneys’ fees. The defendant appealed the award of attorneys’ fees and the employee cross-appealed, again seeking triple the amount of late wages and benefits. The SJC transferred the appeal on its own motion.

The SJC ultimately remanded the case to the Superior Court, requiring the court to award the employee treble wages. On remand, the Superior Court must also award the employee’s attorneys’ fees.

The Reuter decision provides guidance to employers.

In reaching this decision, the SJC relied heavily on the rationale that a terminated employee lacks advance warning of the end of their employment. The legislature intended such employees to be paid in full on their last day to minimize disruption in their ability to maintain their standard of living.

The SJC recognized that its decision in Reuter puts employers in a challenging position when terminating an employee suddenly, such as for illegal or other misconduct, since the amount owed to them might not be readily apparent. In these instances, the SJC proposed that short-term suspension might be necessary instead of immediate termination: “[t]his may mean that employees who, like the plaintiff, have engaged in illegal or otherwise harmful conduct may have to be suspended rather than terminated for a short period of time until the employer can comply with § 148.”

Finally, note that the impact of this ruling also extends to employers’ final pay obligations for employees who voluntarily terminate their employment. In the case of voluntary terminations, the Massachusetts Wage Act requires that employees be paid their final pay no later than at the time of the employer’s next scheduled payroll. Employers who fail to pay those employees all owed wages by that time face potential damages for treble the amount of the final pay.

If you have any questions about the Massachusetts Wage Act, or need assistance with an employee termination or other workforce restructuring, Beck Reed Riden LLP’s employment attorneys are available to assist.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

 

What Can Employers Expect from the Biden Administration?

When a Democratic Party President succeeds a Republican Party President (or vice versa) employers can expect a shift in federal employment law policy. The shift in policy plays out through new administration-supported legislation and Presidential executive orders, and, at the federal agency level, through new agency leadership, new regulations and interpretative guidance, and changes in enforcement priorities and initiatives.

This year, in the transfer of power from the Trump administration to the Biden administration, employers may see a more dramatic swing in employment law policy than seen in most changes in presidential administrations, and potentially even more than the swing seen with the change from President Obama to President Trump.

Here are some labor and employment law areas in which employers should expect to see significant changes:

OSHA/Workplace Safety

President Biden has been critical of the Occupational Safety and Health Administration’s (“OSHA’s”) actions in maintaining workplace safety during the COVID-19 pandemic, including OSHA’s reliance on the “general duty” standard for enforcing employer obligations, and he has stated that he would demand more aggressive action.

True to his word, on January 21, 2021, his first full day in office, President Biden issued an executive order (“EO”) requiring OSHA, within two weeks, to consider whether an “emergency COVID-19 standard” is necessary to protect workplaces and to implement such a standard by no later than March 15, 2021. The EO also requires OSHA, within two weeks, to issue revised guidance to employers on workplace safety during the pandemic.

More broadly, the EO requires OSHA to review its current enforcement efforts and “identify any short-, medium-, and long-term changes that could be made to better protect workers and ensure equity in enforcement.” OSHA will be considering that employers complete more detailed OSHA 300 Logs on workplace injuries and illnesses. In general, employers should expect that OSHA under President Biden will taking a larger and more active role in workplace safety issues related to COVID-19 and beyond.

NLRA/Traditional Labor

Candidate Biden promised he would “be the most pro-union president you’ve ever seen.” Now, as President, he is immediately taking steps to fulfill that promise, including nominating Boston Mayor Marty Walsh, a former union leader, to be U.S. Secretary of Labor, naming a current Democrat Board Member to be Chair of the National Labor Relations Board (“NLRB” or “Board”) and firing the NLRB’s employer-friendly General Counsel when he refused to resign. He will be filling an open slot on the NLRB’s five member Board with a Democrat and, in August, will be able fill another slot with a Democrat when a Republican Board Member’s term expires. By 2022, Democrats will likely hold three of the five spots on the Board.

he “Biden Board” likely will seek to bring back some of the pro-union measures taken by the Obama Board, including accelerated (often called “ambush”) election procedures and timetables that tended to make it easier for unions to win elections and rules that treated as unlawful some employer prohibitions on anti-employer statements on social media. The Biden Board may take steps to broaden union access to employees, to restrict employer anti-union campaign, and to undo the current joint-employer rule that has been an obstacle to union organizing.

The action that would have the greatest impact on the traditional labor landscape would be the passage of the Protecting the Right to Organize (“PRO”) Act, which contains a wish list of pro-union changes to the National Labor Relations Act. (“NLRA”). The PRO Act would, among many other things, create a private right of action for alleged NLRA violations similar to those available under federal employment discrimination statutes, and also provide for greatly enhanced penalties such as double or triple back pay awards, emotional distress damages, individual liability for officers and executives, and attorneys’ fee awards. While passage of this legislation would be the most impactful action, it is also the action least likely to occur because Democrats are unlikely to have enough votes (60) to overcome a Republican filibuster in the Senate.

Wage and Hour Law

President Biden has advocated for a substantial increase in the federal minimum wage – up to $15 by the year 2026. On January 22, 2021, he jump-started that effort by announcing that he was directing his administration to start the work that would allow him to issue an EO within his first 100 days in office requiring federal contractors to pay a $15 minimum hourly wage to workers. In addition, under Secretary of Labor Walsh (assuming he is confirmed, the first former union official to serve as Secretary of Labor in half a century), the U.S. Department of Labor (“DOL”) will most certainly take a more pro-labor approach in its interpretation and enforcement of the federal Fair Labor Standards Act and other wage and hour laws.

Under President Trump, the DOL scaled back significantly the Obama DOL’s overtime regulations and promulgated its own employer-friendly regulations establishing new tests for determining joint-employer and independent contractor status. The DOL now is likely to go in the other direction on these and other wage and hour issues. President Biden and the DOL may take steps to limit the use of mandatory arbitration and class action waivers for claims under federal wage and hour laws. Overall, employers should expect that the DOL will have a progressive pro-labor agenda.

Paid Leave

Candidate Biden advocated for legislation that would provide 12 weeks of paid leave for all workers for their own or a family member’s serious health condition. Upon taking office on January 20th President Biden issued the “American Rescue Plan” to address the COVID-19 pandemic and boost the U.S. economy. Among other things, the plan would extend the leave provisions under the Families First Coronavirus Response Act through September 2021 and expand the law to require employers to “provide over 14 weeks of paid sick and family and medical leave.”

On January 22, President Biden announced that he was directing his administration to start the work that would allow him to issue an EO within his first 100 days in office requiring federal contractors to provide “emergency paid leave” to workers. Although it is unclear what form of more broadly applicable paid leave law can make it through Congress, President Biden has made clear his intention to make federally-mandated paid leave a part of the workplace law landscape

Pay Equity

Candidate Biden stated that he supports a bill titled the “Paycheck Fairness Act.” The bill’s stated purpose is to address wage discrimination on the basis of sex and reduce the gender pay gap. It would, among other things, restrict the use of the “bona fide factor” defense to pay discrimination claims and increase civil penalties for violations of equal pay requirements. The Democrat-controlled House passed the bill in 2019 but the Republican-controlled Senate took no action on it. Now, President Biden’s election, combined with the Democrat victories in the Senate run-off elections in Georgia, increase the chances of the bill becoming law.

More generally, President Biden appears committed to addressing gender and racial pay inequities. On January 21, 2021, he appointed Charlotte Burrows as Chair of the Equal Employment Opportunity Commission. Chair Burrows served as an Associate Deputy General in the Obama administration and most recently served as the Executive Director at the William Institute of the UCLA Law School, focusing on strategies to attain equality for sexual and gender minorities.

Immigration

President Biden intends to pursue a broad immigration reform agenda. He has proposed comprehensive legislation aimed at creating a path to citizenship for millions of undocumented immigrants living in the U.S., including individuals brought to the country as children (so-called “Dreamers”), eliminating green card quotas, reducing lengthy backlogs and improving efficiencies for work visa programs. On his first day in office, he issued a series of EOs that reversed Trump administration policies (1) restricting entry to the U.S. for people from certain Muslim-majority countries (the so-called “Muslim Ban”) and (2) ending work authorization for Deferred Action for Childhood Arrivals (“DACA”) recipients.

Noncompetes

President-elect Biden has stated that he “will work with Congress to eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets, and outright ban all no-poaching agreements.” His position is premised, at least in part, on an assumption that for a large percentage of the American workforce noncompetes have restricted employees’ freedom to move to other jobs and earn higher pay. My colleague Russell Beck has written a detailed analysis of President Biden’s proposed noncompete ban, including protection strategies and steps for employers to take now. Russell’s analysis can be found here.

Every change in administration that includes a change from one party to the other results in significant policy changes and new legislative and administrative actions. In the dynamic and politically sensitive world of labor and employment law, these changes in policy and actions can be quite substantial. And, on top of that, this year we’ve had a change in administrations involving two leaders who hold fundamentally different views on what is best for employers and for employees, and what role government should play in setting and enforcing workplace laws. Consequently, employers should expect more changes at this time than they normally see every four or eight years.

Bob Shea is the author of this article. Bob represents clients in all areas of labor and employment law. He focuses a significant portion of his practice on alternative dispute resolution.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Bob Shea to Speak About Returning High Risk Employees to Work

Bob Shea will appear on a panel of experts assembled by Massachusetts Lawyers Weekly titled “Legal Aspects of Returning High Risk Employees to Work.”

The free event will be held on Tuesday, September 15, at 10 a.m. ET on Zoom. More information and registration is available here.

Anyone who is unable to attend the live session should still register, as Lawyers Weekly will send a recording and the slides after the presentation.

The panel also features:

  • Robert Young, Esq., of Bowditch and Liam O’Connell, Esq., of Nutter

Panelists will cover a wide range of topics, including:

  • Determining who is considered high-risk
  • Addressing issues under the Americans with Disabilities Act and other anti-discrimination laws
  • Considerations in implementing options such as telework or revised duties that minimize contact with other employees/customers to address high-risk employee concerns
  • What to do if employees refuse to return to work
  • Best practices checklist

Bob represents clients in all areas of labor and employment law. He focuses a significant portion of his practice on alternative dispute resolution.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

U.S. Department of Labor Issues Guidance on Tracking Hours of Employees Working Remotely

The COVID-19 pandemic has resulted in a tremendous rise in the number of employees working remotely. Also, many employees are spending parts of their “normal workday” on non-work matters, such as tending to childcare responsibilities and, as the school year starts, supporting remote schooling and/or modified school schedules for their children, which is resulting in employees working irregular, non-scheduled hours. With so many employees not physically reporting to work, and many also working hours outside their pre-pandemic schedules, employers face increased challenges tracking the hours nonexempt employees work and ensuring those employees are paid properly.

response to these challenges, the U.S. Department of Labor (DOL) recently issued Field Assistance Bulletin (FAB) No. 2020-5, providing guidance on employers’ obligation to track the number of hours of compensable work performed by employees “who are teleworking or otherwise working remotely.” The FAB reaffirms the following employer obligations under the Fair Labor Standards Act (FLSA) and the DOL’s interpretive rules:

  • Employers must compensate their employers for all hours worked and work not requested but “suffered or permitted” is work time that must compensated.
  • Employers are required to “exercise [their] control” to ensure that work is not performed if employers do not want it to be performed.
  • Employers “bear the burden of preventing work when it is not desired.” The mere promulgation of a rule against performing unscheduled work is not sufficient; employers have “the power to enforce the rule and must make every effort to do so,” including through disciplinary action.
  • An employer’s obligation to compensate employees for hours worked applies when the employer has “actual notice” or “constructive notice” that the work was performed.
  • An employer has constructive notice if the employer “has reason to be believe work is being performed,” which can occur “if the employer should have acquired knowledge of such hours through reasonable diligence.”
  • However, an employer’s obligation to “make every effort” to prevent unwanted work being performed “is not boundless,” as “[t]he reasonable diligence standard asks what the employer should have known, not what ‘it could have known.’”

Importantly, the DOL states in the FAB that an employer generally may satisfy it obligation to exercise reasonable diligence to acquire knowledge regarding employees’ unscheduled hours of work by establishing a reasonable procedure for an employee to report unscheduled work time. If an employee then “fails to report unscheduled hours worked through such a procedure [and the employer is not otherwise notified of hours worked], the employer is generally not required to investigate further to uncover unreported hours.”

According to the DOL, when an employee “fails to follow reasonable reporting procedures [he or] she prevents the employer from knowing its obligation to compensate the employee.” Of course, “the employer cannot implicitly or overtly discourage or impede accurate reporting [of hours worked], and the employer must compensate employees for all reported hours of work.”

Key Takeaways

Although for the most part the FAB reaffirms existing law and the DOL’s interpretive rules, it nevertheless provides timely guidance to employers, including those who are now facing new or expanded challenges in managing employees working remotely. The key takeaways for employers are:

  1. Employers are required to pay employees for all hours worked when employers either know or should have known the work was performed.
  2. If an employer does not want its nonexempt employees to work outside their scheduled work hours (without prior management authorization), the employer should promulgate a rule prohibiting such work and be consistent in enforcing the rule, including through disciplinary action, when appropriate.
  3. Employers should communicate clearly to nonexempt employees that they are to record and report all hours worked, including non-scheduled hours, and should have a procedure for employees to do so. This policy and procedure can be part of an employer’s broader remote work policy and, again, should be consistently enforced.
  4. Employers should never withhold pay for hours worked, even when the work time is unauthorized or not properly reported. An employer that fails to pay nonexempt employees for hours the employer knew or should have known were worked faces the prospect of substantial liability, including a multiple of the unpaid wages under the FLSA and state wage laws, plus costs and attorneys’ fees.

Bob Shea is the author of this article. Bob represents clients in all areas of labor and employment law. He focuses a significant portion of his practice on alternative dispute resolution.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Bob Shea to Moderate Panel on Massachusetts Wage Act

Bob Shea will moderate a panel at the Massachusetts Bar Association titled “Massachusetts Wage Act: Treble Your Knowledge.” Bob serves on the Massachusetts Bar Association Labor and Employment Section Council. The panel will be co-moderated by Michelle De Oliveira of Kenney & Sams.

The free event will be held on Monday, July 27, 2020, from 1 to 2:30 p.m. on Zoom. More information and registration is available here.

The panel features :

  • Richard S. Loftus, Esq., of Hirsch Roberts Weinstein LLP
  • Hillary Schwab, Esq., of Fair Work PC
  • Katherine Watkins, Esq., of the Massachusetts Attorney General’s Office

This program will examine the interplay between federal and state wage and hour laws, as well as recent developments under the Massachusetts Wage Act, with a focus on:

  • Overview: Fair Labor Standards Act and Massachusetts Wage Act
  • What is a wage?
  • Commissions vs. bonuses
  • Treble damages — when are they triggered and to what do they apply?
  • Independent contractor issues
  • Joint employer issues
  • Attorney General’s Office’s enforcement priorities and initiatives
  • When the Attorney General’s Office pursues civil vs. criminal penalties

Bob represents clients in all areas of labor and employment law. He focuses a significant portion of his practice on alternative dispute resolution.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Department of Labor’s Final Rule on Overtime Raises Minimum Salary Level to $35,568

Vehicles Stopping In Front Of Pedestrian LaneOn September 24, 2019, the U.S. Department of Labor issued a final rule significantly increasing the minimum salary level for the “white collar” exemptions to the Fair Labor Standards Act (“FLSA”).  Absent a legal challenge, the new threshold will be effective on January 1, 2020.

Under the final rule, the minimum salary level for exempt executive, administrative, and professional employees will increase from $455 a week ($23,660 annualized) to $684 per week ($35,568 annualized). Employers will be permitted to pay up to 10% of the minimum salary level in commissions, bonuses, and other non-discretionary incentives, provided that those non-discretionary payments are made at least annually or more frequently.  If the incentive payments fall short by any amount in any given 52 week period, the employer has a single pay period to make a “catch up” payment to ensure that the employee will receive the full $35,568 for the year. A failure to ensure that the employee has earned the minimum salary level would entitle that shorted employee to overtime pay for the entire prior year.

The final rule also increases the total annual compensation required to meet the test for a highly compensated employee, who is exempt from overtime requirements largely on the basis of total compensation paid, from $100,000 to $107,432. While nondiscretionary bonuses and incentive payments (including commissions) may be counted toward the total annual compensation requirement for a highly compensated employee, the highly compensated employee must still receive the standard salary requirement of $684 per each week on a salary or fee basis.

Note that there are special salary tests for Puerto Rico, the Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, and employees in the motion picture producing industry.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

Massachusetts Raises Minimum Wage in “Grand Bargain”

On June 28, 2018, Massachusetts Governor Charlie Baker signed into law the “Grand Bargain” bill, that, over the next five years, will gradually raise the minimum wage to $15.00 per hour, require paid family and medical leave for Massachusetts employees, and phase-out Sunday and holiday time-and-a half pay for certain retail employees.

Minimum Wage Increase

The first minimum wage increase will take effect on January 1, 2019, at which time the minimum wage will increase from its current rate of $11.00 per hour to $12.00 per hour.  Thereafter, it will increase by 75 cents on January 1st of each year until it reaches $15.00 per hour in 2023.  Over the same five-year period, the minimum cash wage applicable to tipped workers will increase from $3.75 per hour to $6.75 per hour, with the rate of pay increasing by 60 cents each January 1st from 2019 to 2023.

Paid Family and Medical Leave

The new law also establishes one of the most generous family and medical leave programs in the nation, which will be phased in over several years.  While administrative regulations from a newly-created state agency, the Department of Family and Medical Leave, will be forthcoming and will provide more specific guidance to employers with regard to implementation of the law and obligations regarding family and medical leave, the key provisions are evident.

Effective July 1, 2019, employers must post a notice of benefits available under the act and provide employees with a similar written notice of the benefits within 30 days of the employee’s date of hire.  As of July 1, 2019, employers will also start contributing to the Family and Employment Security Trust Fund, which will fund the leave program, at a contribution rate of 0.63 % of each employee’s wages, which is subject to annual adjustment.  Employers may require employees to pay a portion of the contributions.  Employers with fewer than 25 employees in Massachusetts are not required to pay the employer share of the contributions.

Effective January 1, 2021, eligible employees will be able to take up to 12 weeks of paid family leave per benefit year and up to 20 weeks of paid medical leave per benefit year, with a maximum of 26 total weeks of paid leave per benefit year.  Employees are eligible for medical leave if they have a serious health condition.  Employees are eligible for family leave:

  1. To care for a family member with a serious health condition;
  2. To bond with a child during the first 12 months after the child’s birth or placement for adoption or foster care; or
  3. To attend to exigent circumstances arising out of a family member’s active military duty or impending call to active military duty.

Note that if leave is taken to care for a family member with a serious illness arising out of military service, up to 26 weeks of leave may be taken in a benefit year.  Paid family or medical leave under the law will run concurrently with any leave available to the employee under the Family Medical Leave Act or the Massachusetts Parental Leave Act.

After a seven-day waiting period (during which an employee can use accrued sick or vacation time), the employee will be entitled to wage replacement from the Family and Employment Security Trust Fund equal to 80% of their wages, up to a maximum of 50% of the state average weekly wage, and 50% of their wages above that amount, up to a maximum of $850 per week or an adjusted amount that equals 64% of the state average weekly wage.

The law also includes a notable anti-retaliation provision.  Retaliation against employees for exercising their rights under the new law is prohibited.  Significantly, any negative change in the terms or conditions of employment that occurs during a leave or within six months of the leave creates a presumption of retaliation.  Employer can rebut this presumption only by clear and convincing evidence of a non-retaliatory and independent justification for the change.  The law also provides for a private right of action with a three-year statute of limitations.  Available remedies include reinstatement, payment of three times the employee’s lost wages and benefits, and reasonable attorneys’ fees and costs.

Gradual Elimination of Sunday Premium Pay

Currently, the Massachusetts “blue laws” require that most non-exempt employees who work in retail establishments must be paid time-and-a-half  on Sundays and certain holidays.  This requirement will be gradually phased out over the coming years.  On January 1, 2019, the premium rate will decrease to 1.4 times the regular rate of pay.  Thereafter, it will decrease by 0.1 each January 1, until it is eliminated altogether on January 1, 2023.

Next Steps

As a result of the “Grand Bargain,” Massachusetts employers will want to prepare for the wage adjustments to minimum wage and Sunday premium pay that begin to take effect on January 1, 2019 and will continue annually until 2023.  Although the law’s provisions regarding paid family and medical leave are not fully effective until 2021, regulatory guidance is expected in 2019 and certain provisions are effective in July 2019 as well.  Employers are well advised to review their current leave policies, explore and anticipate procedures and practices to meet the leave law requirements, and remain abreast of any forthcoming guidance and regulations.

eck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and labor and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Superior Court Expands Wage Act to Include Severance Pay

In a departure from established precedent, a Massachusetts Superior Court has ruled for the first time that severance pay qualifies as “wages” under the Massachusetts Wage Act, G.L. c. 149, § 148.  In Juergens v. MicroGroup, Inc. (Docket No. 10-CV-2379-D), the plaintiff Albert Juergens successfully negotiated a six-month severance provision as part of his job offer at MicroGroup, Inc.  He began his employment in October 2008, and was laid off in February 2010.  When MicroGroup failed to make the severance payment, Juergens sued, alleging – among other things – violation of the Wage Act.

In its motion to dismiss, MicroGroup relied upon Prozinski v. Northeast Real Estate Services, LLC, 59 Mass. App. Ct. 599 (2003), which for nearly eight years has stood for the proposition that severance pay does not constitute wages under the Wage Act.  In his decision denying MicroGroup’s motion, Superior Court Judge Dennis J. Curran declined to follow Prozinski.  Instead, in an analysis notable in its brevity, he relied on Wiedman v. Bradford Group, Inc., 444 Mass. 698 (2005), which, according to him, “authorized a more expansive interpretation of the Wage Act;” one that “should not be limited to exclude severance pay.” The problem with this analysis is that Wiedman dealt with the issue of unpaid commissions, which are specifically included as wages under the Wage Act.  Severance pay, on the other hand, is not referred to in the Act at all.

While lawyers representing employees are undoubtedly salivating over the Juergensdecision and the prospect of recovering treble damages and attorneys fees (both mandated under the Wage Act), they may want to wait and see whether the decision is upheld on appeal.  But assuming that plaintiff’s attorneys are not going to wait, employers must ensure that severance payments are paid on a timely basis.  Unless and until an appellate court overturns the Juergens decision, failure to make agreed-upon severance payments exposes employers to liability under the Wage Act, including treble damages and attorneys fees.

This article originally appeared in Stephen B. Reed’s site, The Management-Side Lawyer.

About Us

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and labor and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.