Massachusetts attorneys are advising businesses to rethink the way they pay and fire employees in the wake of a state top court decision that put them on the hook for triple damages when they’re late on a paycheck.
Compliance trainings for managers and monitoring payroll providers are just some of the things companies are doing to mitigate legal risk after the Massachusetts Supreme Judicial Court’s game-changing 2022 ruling, attorneys say. Some companies have also eliminated heat-of-the-moment firings that now carry significant risk—since employees must be paid the day of their termination.
The state court’s ruling in Reuter v. City of Methuen has been the status quo for one year now. That order holds employers liable for the damages even when an error in payment occurs through no fault of their own. And businesses are still grappling with the ramifications.
“It’s really a no mercy standard for companies,” said Michelle De Oliveira, a director for Kenney & Sams who represents businesses in employment disputes.
Management-side attorneys have worried the decision would embolden employees to sue for mistakes an employer isn’t at fault for. Plaintiffs’ attorneys, employment law scholars, and the Supreme Judicial Court itself say the strict penalty is necessary to protect employees from late wage payments and that squabbles over good-faith...
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