WARN Act Violations ≠ Wage Act Violations

Early in 2018, the Massachusetts Wage Act, G.L. c. 149, §148, was in the news with two noteworthy decisions by the Massachusetts Supreme Judicial Court. Bookending 2018, the Supreme Judicial Court closed the year with yet another decision narrowing the definition of earned wages under the Wage Act, this time in connection with a premature mass layoff.

In the case of Calixto v. Coughlin et al, ISIS Parenting (“ISIS”), which offered pre- and post-natal classes and sold related products, abruptly closed, throwing more than 200 employees out of work. ISIS, however, had failed to give the proper 60-day notice under the federal Worker Adjustment and Retraining Notification (WARN) Act. The employees instituted a federal class action against ISIS and obtained a $2 million default judgment, representing the pay they would have received during the 60-day notice period if the company had not closed prematurely.

As the judgment against ISIS was uncollectable, the employees then filed a state court action against four corporate officers of ISIS alleging that the WARN Act damages were wages to which they were entitled under the Massachusetts Wage Act. They sought to hold those four individuals personally liable and requested that their damages be trebled, remedies available to them only under the Wage Act.

Once again, the Court wasn’t buying. The Wage Act, the Court held, is directed at “particularly egregious behavior, i.e., not paying wages for work actually performed.” It is not intended to provide the same protection and enhanced remedies for other employment violations where work would have been performed but for some intervening event, such as the abrupt closure without notice. Giving the phrase, “wages earned,” its plain and ordinary meaning, the Court affirmed the dismissal of the employees’ suit.

Since his election in 2014, Governor Charlie Baker has appointed five of the seven current Supreme Judicial Court justices. In my blog posts regarding two earlier Wage Act decisions by that Court, Segal v. Genitrix, LLC, and Mui v. Massachusetts Port Authority, [See “Violation of Sick Time Payout Policy Not a Wage Act Violation,” January 31, 2018; “A Bridge Too Far – Individual Liability for Wage Act Violations,” January 3, 2018], I posed the question as to whether we were seeing a determined effort to hold the line against an expansive interpretation of “earned wages” under the Wage Act and the enhanced remedies that result. While it may still be too early to call that race, the recent data points suggest that a narrower view is prevailing.

About Rich Van Nostrand

Rich is a partner at the Firm. He has extensive experience in general civil trial work, with concentrations in business, commercial and employment litigation. He provides advice and representation in a variety of business and commercial litigation matters, including shareholder disputes, corporate dissolutions, intra- and inter-company disagreements, and intra-family business disputes. Rich also provides ongoing employment litigation and counseling services to numerous clients in the private, public and higher education sectors. In the private sector, Rich represents clients in a broad range of industries including health care, professional services, high technology, industrial and manufacturing. In addition, he is also frequently selected by litigants to assist in the resolution of their disputes as an independent arbitrator or mediator.
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