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Let's face it... employee wages are sacrosanct

Guest post by: Marijo McCarthy

Article Overview: The sooner Massachusetts small business owners accept this, the sooner they can stop having skirmishes and "misunderstandings" with the Attorney General's office that only result in frustration, penalties and ill will on all sides.

Let's face it... employee wages are sacrosanct

The sooner Massachusetts small business owners accept this, the sooner they can stop having skirmishes and "misunderstandings" with the Attorney General's office that only result in frustration, penalties and ill will on all sides.

The latest effort at an employer attempting an end run around the Massachusetts Wage Act is a case in point. It resulted in a decision by the Supreme Judicial Court (Massachusetts' highest court) upholding the AG's decision to require the employer not only to reimburse its employees for the wage deductions impermissibly withheld from their paychecks, but to pay an almost $10,000 penalty as punishment.

Briefly, here are the facts of this latest case…

ABC Disposal Service, Inc. unilaterally implemented a written policy intended to promote safety and decrease negligent driving. An ABC employee could choose to avoid being disciplined by reimbursing the company if that employee was found at fault in an accident involving company trucks. The policy established that the company was the sole and unilateral "trier of fact" in the employee-driver accidents, deciding whether the employee was at fault and, if so, what penalty would be imposed… and paid to the company through a wage deduction.

The company argued that the practice was permissible simply because the employees had a choice… an "offender" could choose the wage deduction, decided by the company, or discipline. The AG's office disagreed and was ultimately supported by the SJC.

Of course, there are nuances to this case and as with every situation, nothing is ever black or white. But the purpose of today's newsletter is not to hone in on the details… it's to serve as yet another warning to small business employers that employee wage actions are fraught with peril. The failure to carefully and cautiously follow the strict letter of the law can cost the hapless employer significant dollar penalties.

Interestingly, this case did confirm at least one situation where the AG believes there is a valid wage deduction available to employers under the Wage Act… where there is "proof of an undisputed loan or wage advance" from the employer to the employee. So, while I prefer that my clients not put themselves into the category of being a "lender" to help out an employee, if they do, my recommendation is that they properly document that transaction with a promissory note. The small business owner then has clear evidence of the mutuality of the loan advance, an element which is of particular importance if the AG's office comes calling.

The moral of the story? Think long and hard before withholding employee wages. If you think you're in the right, I know a good employment lawyer to whom I would happily refer you for that all-so-important second opinion.

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Article Tags: attorney generals office, employee wages, massachusetts, misunderstandings, skirmishes, small business owners



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A regular employee or a contracted employee? - Thank you Louis, Also in Japan, an employee is an employee. In my opinion, contracted employees don’t receive enough training. And they are often engaged in routine chores. Which factors should we choose about hiring regular or contracted employees? I choose contracted employees if I hire someone engaged in routine chores. On the other hand, I choose regular employees if I hire someone engaged in important duties. One of the most important factors especially for an entrepreneur is wages, too. What do you think?
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