Superior Court Flip-Flops on Individual Liability for Wage Act Violations

The Massachusetts Wage Act, the law governing wage and hour issues in Massachusetts, is serious business. Even inadvertent violations of the law result in mandatory triple damages to employees who were paid improperly. The statute also imposes individual liability on “[t]he president and treasurer of a corporation and any officers or agents having the management of such corporation.” This means that the president, treasurer, and managing officers of a corporation put their personal assets at risk if wages are not paid in accordance with the Massachusetts Wage Act.

Although the statute clearly puts corporate players at risk, it does not speak to officers and managers of other unincorporated business entities. A little over a year ago, a Massachusetts Superior Court judge ruled that the individual liability provision of the Massachusetts Wage Act did not extend to the president and managing officer of a limited liability company (“LLC”), because an LLC is not a “corporation,” and the language of the Wage Act only references individual liability to attach to the president, treasurer, or managing officer of a “corporation.”

However, last month a different Superior Court judge did a complete 180 and ruled that officers of an LLC could be on the hook personally for Wage Act violations. The court looked to different language in the statute to reach its conclusion; particularly the section that reads “no person shall . . . exempt himself from” the Wage Act. The court reasoned that by forming an LLC, officers could exempt themselves from the thrust of the Wage Act. In the court’s view, such scheming is not in line with legislative intent of the Wage Act: protection of employees and their right to wages.

So where do we stand? These decisions clearly conflict with one another, and unless an appellate court rules on the issue, any individual managing officers could be at risk for liability under the Wage Act. We recommend periodic wage/hour audits for employers to make sure that they are in compliance with state and federal wage and hour laws.