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HEALTHCARE LAW
Common Compensation Blunders
Violations of State, Federal Wage-and-hour Laws Can Prove Costly
By JOHN GWANNON, Esq.
age-and hour-compliance is never easy for businesses, and a recent decision from the Massachusetts Supreme Judicial Court (SJC) just made things harder.
In Reuter v. City of Methuen, No. SJC-13121 (Mass. April 4, 2022), the Mas- sachusetts Supreme Judicial Court (“SJC”) ruled that paying employees late is equivalent to not paying at all. This means employees are entitled to triple damages if they are not paid on time, because under the Massachusetts Wage Act, employ- ers who fail to pay wages are liable for three times the unpaid wage amount (treble damages). With that case in mind, here are a few common compensation mistakes employers should avoid to ensure solid wage and hour compliance.
Failure to pay wages on time: The Massachusetts Wage Act requires employers
“The Massachusetts Wage Act requires employers to pay all wages, including any accrued, unused vacation time, to employees who are terminated on their last day of work. For employees who voluntarily resign, all wages are due on or before the next regularly scheduled pay date.”
to pay all wages, including any accrued, unused vacation time, to employees who are terminated on their last day of work. For employees who voluntarily resign, all wages are due on or before the next regularly scheduled pay date.
Too often, employers pay final wages a day or a week too late. This is especially common with unpaid commissions. The problem here is that under the Reuter v. City of Methuen case, those wages are not paid on time. Therefore, the employee is due triple damages under the Wage Act.
This is what happened to the City of Methuen; the city paid an employee her final paycheck of about $9,000 (including unused vacation time) about three weeks late. The court ruled that the employee was due almost $30,000 because the city paid the employee a few weeks late. Professional tip: Don’t make this same mis- take. Make sure employees who are separated from work are paid all wages on their last day of work. If the final check is not ready the day you need to let someone go,
have a process in place to suspend the employee while you work out cutting the final paycheck.
Misclassifying employees as independent contractors: It can be tempting to “contract” with an individual to provide services that are similar to what your employees do. This relationship has tax advantages, no need to worry about leave laws and other employment regulations, and a perceived sense of freedom to easily terminate the relationship if it does not work out.
The problem is that classifying individuals as independent contractors (“I/C”) in this situation can be risky. This is because the I/C classification may violate the Massachusetts Independent Contractor statute, which requires workers to be clas- sified as employees, not I/Cs, when the work being performed is similar to that of
other employees.
The Massachusetts Independent Contractor statute also
requires true contractors to: (1) be free from control and direction from the business (meaning, the contractors sets their own hours and performance standards); and (2) have their own independently established profession or business (meaning, the contractor has their own LLC, PC, or other established business entity). Even where an individual agrees to be classified as an independent contractor and paid via a1099, businesses run a risk of violating the Massachusetts Independent Contractor if all of the above-mentioned factors are not satisfied.
Travel time troubles: Both Massachusetts and federal law require employers to pay employees for non-commuting travel time during the day. This is commonly referred to as intraday
travel. Here is the example provided by the federal Department of Labor: Barbara is a personal care aide providing assistance to Mr. Jones. Barbara drives him to the Post Office and grocery store during the workday. Barbara is working and the travel time must be paid.
What employers in Massachusetts might not know is that under state law you also have to reimburse Barbara for all “associated transportation expenses.” This means you need to pay her for costs like mileage, tolls, and parking (if applicable). It is unclear what employers have to pay for mileage, but the safe bet is paying in accordance with the IRS standard mileage rate, which is currently 58.5 cents per mile.
Please see Law, page 43 Nominations Sought for Chamber’s Super 60 Program
SPRINGFIELD — The Springfield Regional Chamber (SRC) is seeking nominations for its annual Super 60 awards program. Super 60 recognizes the success of the fastest-growing and privately owned businesses in the region. Nominations must be submitted by August 5.
Each year, Super 60 identifies the top-performing com- panies in this region, based on revenue growth and total revenue. In 2019, one-quarter of the Total Revenue win- ners exceeded $30 million, with all the winners combining for more than $720 million in revenue. In the Revenue Growth category, all winners had growth above 21%, and 50% of the top 30 companies grew by more than 50%.
“Small businesses are the backbone of our region and have been especially resilient throughout the pandemic,” said Springfield Regional Chamber President Diana
Szynal. “We’re thrilled to bring this awards program back to honor our region’s businesses and recognize their suc- cessful navigation through the past two years.”
To be considered, companies must be independently and privately owned; based in Hampden or Hampshire counties or be a member of the Springfield Regional Chamber; have revenues of at least $1 million in the past fiscal year; and have been in business for at least three full years. Companies are selected based on their percentage of revenue growth over a full three-year period or total revenues for the latest fiscal year.
Companies may be nominated by financial institutions, attorneys, or accountants, or they can self-nominate. Along with an application, nominators must provide
net operating revenue figures for the last three full fiscal
years, signed and verified by an independent auditor. All financial information must be reported under generally accepted accounting principles and will be considered confidential.
Nomination forms can be found on the chamber;s website, and can be submitted by faxing to SUPER 60, Springfield Regional Chamber, (413) 755-1322. Nomina- tion forms must be submitted no later than August 5. The Super 60 awards will be presented at the annual luncheon and recognition program on Oct. 28, at the MassMutual Center in Springfield.
The Super 60 award luncheon attracts more than 500 business leaders each year. Super 60 sponsorships are now available. For information, call (413) 755-1309 or e-mail Szynal at szynal@spring fieldregionalchamber.com.