Reuter v. City of Methuen (Massachusetts Supreme Judicial Court)
Boston- This case, a putative class action, was before the Massachusetts Supreme Judicial Court (SJC) on direct appellate review, and the Court requested amicus briefing on important issues concerning the measure of an employee’s damages for the late payment of earned wages under the Massachusetts Wage Act, G. L. c. 149, § 150. The Wage Act requires the prompt payment of earned wages and, where wages are not paid promptly it awards a “prevailing” employee “treble damages, as liquidated damages, for any lost wages and other benefits and . . . the costs of the litigation and reasonable attorneys’ fees.” (Emphasis added.)
In this case, upon the plaintiff employee’s termination, the employer, the City of Methuen, failed to pay the plaintiff promptly for her earned, unused vacation time, which must be paid to the employee as earned wages upon her discharge, under the Wage Act. Before the plaintiff brought this case, however, the city, recognizing its error, paid the plaintiff for her earned unused vacation time and also paid her treble the interest on that amount that had accrued from the date of her discharge, consistently with the statutory language quoted above.
There were two issues presented on appeal. The first was whether the employee suffered any compensable “lost wages” under the Wage Act, and if so how much, when, as in this case, her employer is late in paying her wages, but pays her before she files suit, and pays her treble the interest on that late payment of wages before she files suit. That is, did the employer already provide the plaintiff with all of the recovery to which she was entitled under the Wage Act (the earned vacation time and the interest on that late payment), or does the employer still owe the plaintiff for treble that earned vacation time (i.e., two more payments of the earned vacation time already paid)? The second issue built on the first issue and asked whether, the plaintiff is the prevailing party under the Wage Act, and is therefore entitled to an award of costs and reasonable attorneys’ fees, when, as NELF argues, she has already received all the relief to which she was entitled (both her lost wages and the interest on that late payment)) before she filed suit under the Wage Act.
The Superior Court limited the recovery of the plaintiff, Beth Reuter, a former custodian of the city of Methuen’s school department, who was discharged for being convicted of theft of municipal funds, to $185.42, which represented treble the amount of interest on the city’s late payment of unused, earned vacation time ($8,952.15), calculated at the statutory 12% interest rate, and running from the date of her discharge until the date of payment a few weeks later. However, the city had already paid Reuter both the unused vacation time and the $185.42 in interest, before she ever filed suit. Nonetheless, the court also concluded that Reuter was the “prevailing party” under § 150 of the Wage Act and awarded her $74,000 in attorney’s fees.
In its amicus brief in support of the city, NELF made two chief arguments. First, NELF argued that the Wage Act, in effect, provides that compensable “lost wages” are measured at the time that the employee files her complaint. The Act therefore permits an employer to make a late payment of wages before a complaint is filed and thereby, as the Superior Court found, reduce the employee’s “lost wages” to the interest that accrued on the late payment.
As support for this argument, NELF demonstrated that the Wage Act essentially bars an employer from limiting its damages for lost wages by paying the employee’s wages after the employee files suit. “The defendant shall not set up as a defence [sic] a payment of wages after the bringing of the complaint.” G. L. c. 149, § 150 (1st ¶). See Dobin v. CIOview Corp., 16 Mass. L. Rptr. 785, 2003 WL 22454602, at *6-8 (Mass. Super. Ct. Oct. 29, 2003) (Gants, J.)*6-8 (discussing same); Clermont v. Monster Worldwide, Inc., 102 F. Supp.3d 353, 358 (2015) (following Dobin and holding same). (same). The meaning of this sentence is at first elusive, because an employer who makes a late payment of wages has violated the Wage Act, regardless of when the employee files suit. See Dobin, 2003 WL 22454602, at *7 (discussing same). However, when this language is interpreted in connection with the employee’s right to treble damages for any “lost wages,” provided in the second paragraph of the same section, its meaning becomes clear. See id. See also Com. v. Mogelinski, 466 Mass. 627 (2013) (“We look to the language of the entire statute, not just a single sentence, and attempt to interpret all of its terms harmoniously to effectuate the intent of the Legislature.” (citation and internal punctuation marks omitted)).
When understood in its full context, then, this statutory language prevents an employer from mitigating its damages for “lost wages” after the plaintiff has filed her complaint. Id. Therefore, a plaintiff’s compensable “lost wages” are measured at the time that she files her complaint, and an employer is therefore liable for treble the amount of any unpaid wages at that time.
By contrast, the statute does not provide that “[t]he defendant shall not set up as a defense a payment of wages before the bringing of the complaint.” See Cobble Hill Ctr. LLC v. Somerville Redevelopment Auth., 487 Mass. 249, 256 (2021) (a court is not at liberty to amend statute by “read[ing] into the statute a provision which the Legislature did not see fit to put there[.]”) (citation and quotation marks omitted). By necessary implication, then, the statute permits the employer to limit its damages for “lost wages” by making a late payment of wages before the employee files suit. See Dobin, 2003 WL 22454602, at *6-8 (discussing same); Clermont, 102 F. Supp. 3d at 358 (same). When an employer does so, as in this case, the employee’s only compensable “lost wages” are the interest accruing on that late payment of wages. As the late Justice Gants, then of the Superior Court, summarized the mechanics of the statute succinctly:
This Court understands the provision barring the defense of post-complaint payment to mean that an employer found in violation of the Wage Act is required to pay treble the amount of wages and benefits that had been unpaid at the time the complaint was brought; the employer may not reduce this amount by making payment after it learns of the complaint. The corollary to this interpretation is that an employer is not required to pay treble the lost wages and benefits if the wage and benefit payments were tardy but made before suit was brought. When wages and benefits are tardy but paid before the complaint was brought, the “loss of wages and other benefits” is simply the interest foregone from the delay in payment, which would be trebled under the Act.
Dobin, 2003 WL 22454602, at *7(emphasis added). See also Clermont, 102 F. Supp.3d at 358 (quoting same); Littlefield v. Adcole Corp., 2015 WL 5057652, at *3 (Mass. Super. June 18, 2015) (same).
Thus, NELF argued, § 150 indicates a legislative intent to strike a balance between the interests of the employer and the employee, by measuring “lost wages” at the time that the plaintiff has filed her complaint. Until that time, the employer has the opportunity to limit its damages to the interest accruing on any late payment of wages. After that time, however, the employer must pay treble the amount of those unpaid wages, along with the interest payments.
NELF’s second argument in support of the city was that the Superior Court erred when it awarded attorneys’ fees to the plaintiff as the “prevailing party” in this case, despite the fact that she received all the relief to which she was entitled before she brought suit. As NELF explained, the standard for finding a plaintiff in a Wage Act case to be the prevailing party was a recently stated by the Supreme Judicial Court as follows: “[A] plaintiff prevails for purposes of an award of attorney’s fees under the Wage Act when his or her suit satisfies the catalyst test by acting as a necessary and important factor in causing the defendant to provide a material portion of the relief demanded in the plaintiff’s complaint.” Ferman v. Sturgis Cleaners, Inc., 481 Mass. 488, 496 (2019). Reuter did not prevail under this test simply because her employer had already paid her treble the amount of interest on its late payment of her wages before she filed her complaint and obtained that same relief in court. Therefore, her suit was not in any way a “catalyst” for her employer’s prior decision to provide her with the very relief that she subsequently obtained in court. Stated otherwise, the plaintiff did not prevail under the Wage Act because her suit failed to change her legal relationship with her employer in any way. See Killeen v. Westban Hotel Venture, LP., 69 Mass. App. Ct. 784, 789-90 (2007) (employee prevails under Wage Act if suit alters legal relationship between parties).
In its decision of April 4, 2022, the SJC rejected then-Judge Gants’s interpretation of the Wage Act in Dobin, upon which NELF had based its arguments. Instead, the Court held that, under the plain language of the Wage Act, an employer has violated an employee’s statutory rights when it has made a late payment of the employee’s wages, regardless of when the employee files suit. “[I]n interpreting [the Wage Act], we have always recognized it was intended for the protection of employees, who are often dependent for their daily support upon the prompt payment of their wages.” Reuter v. City of Methuen, 489 Mass. 465, 468 (2022) (cleaned up). In particular, the Court explained that the “lost wages” that the employee is entitled to recover under the Wage Act include late-paid wages. Therefore, the city owed the plaintiff treble the entire amount of her late-paid wages. The Court also concluded that the plaintiff was indeed the prevailing party under the Wage Act, because she ultimately secured the full measure of her damages due only by pursuing her claim through the end of the appellate process.
The Court simply refused to take Judge Gants’s lead to draw a negative inference from the Wage Act’s language barring the employer’s right to raise the defense of payment of wages after the employee has filed suit. The Court also failed to see any statutory basis for Judge Gants’s reduction of damages to the interest accrued on the late payment of wages that the employer makes before the employee files suit.