Condominium associations and management companies are frequently faced with the hard decision of terminating employees. When faced with making the decision to terminate an employee, all employers should be sure that to comply with the requirements contained in the Massachusetts Payment of Wages Act, G.L. c. 149, § 148 ("Wage Act") - or be subject to severe and costly penalties. If an employer is found to have violated the Wage Act by not paying an employee all due and owing wages on the date of terminating the employee, the employer is subject to strict liability under the Wage Act and liable to pay treble the amount of late-paid wages and the payment of reasonable attorneys’ fees incurred by the terminated employee in pursuing the wage claim.

Thus, when making the decision to terminate an employee, employers should be sure to plan ahead and have a check prepared to be delivered to the employee at the termination meeting that contains the total amount of wages owed to the employee, including any and all accrued and unused vacation time.

The Wage Act provides that employers must pay their employees “weekly or bi-weekly” within either six or seven days of the “termination of the pay period during which the wages were earned.” G.L. c. 149, § 148. However, “any employee discharged from such employment shall be paid in full on the day of [their] discharge.” Id. Wages are also defined under the Wage Act to include “any holiday or vacation payments due an employee under an oral or written agreement.” Id. Combined, these two provisions make clear that a terminated employee is not only entitled to any and all owed wages, but also all accrued vacation benefits on the day of discharge. The S.J.C. in Electronic Data Sys. Corp. v. Attorney Gen., 454 Mass. 63, 67-68, (2009), citing to the Attorney General Advisory 99/1 (1999) held that “[l]ike wages, the vacation time promised to an employee is compensation for services which vests as the employee’s services are rendered. Upon separation from employment, employees must be compensated by their employers for vacation time earned”.

Terminated employees not paid in full on the date of their discharge may bring a private action “for injunctive relief, for any damages incurred, and for any lost wages and other benefits.” G. L. c. 149, § 150. The Wage Act does not tolerate or in any way condone delay in the payment of terminated employees of their due and owing wages on the date of termination.

In Reuter v. City of Methuen, 489 Mass. 465, 471 (2022), the S.J.C. held that “the Legislature appears to have considered the differences between involuntary discharges and other separations from employment, and apparently the consequences of differential treatment. [The Wage Act] expressly distinguishes between an “employee leaving [their] employment,” who must “be paid in full on the following regular pay day” and an “employee discharged from such employment,” who must “be paid in full on the day of [their] discharge.” Reuter, at 472. For employees who voluntarily leave their employment, the employer does not control when the employee quits and therefore may not have advance notice. Therefore, the Wage Act provides a reasonable grace period for employers to calculate and provide the employees’ pay, including vacation pay. In cases where the employer decides if and when to terminate an employee, the employee has no control over when it will happen and may not know ahead of time. Thus, as the S.J.C. held in Reuter, “the Legislature’s command is clear: if you choose to terminate an employee you must be prepared to pay him or her in full when you do so.” Id. This may mean that employer may have to delay the termination date for a short period of time until the employer can conduct the necessary calculations to ensure that the employee is paid on their termination date all due and owing wages.

Thus, when making the decision to terminate an employee, employers should be sure to plan ahead and have a check prepared to be delivered to the employee at the termination meeting that contains the total amount of wages owed to the employee, including any and all accrued and unused vacation time.

Employers should also be aware that an employee can bring a wage claim against not only the employer entity, but also can allege claims against corporate officers and agents of the employer entity. Criminal penalties may also result in a violation of the Wage Act which may be enforced by the Massachusetts Attorney General's Office. This article concerns only some of the common wage issues that arise in terminating employees from a civil perspective and I will leave the potential liability to corporate officers and potential criminal penalties for another day.

If you are a condominium association employer or a management company employer, the takeaway of this article should be that it is strongly advised to become well versed in your obligations under the Wage Act and/or consult with an attorney prior to terminating any employee in order to be certain that all potential wage issues have been complied with before informing the employee of their termination. MBM stands ready to assist such employers in these matters.