You’re Damned if You Do … Deduct or Set Off Wages Earned By Massachusetts Employees

Posted: March 22, 2011 in Lawsuits, Overzealous Government Regulators, Personnel Policy Fun, Wages, Overtime, Commissions and Pay Issues

Many employers may think that they have the right to charge employees for things such as broken products, lost uniforms, fines for safety violations, loans, lost money, alleged theft, etc. In Massachusetts at least, an employer will face exposure for deducting such amounts from wages. Massachusetts General Law Chapter 149, Section 148 requires full and prompt payments of wages due to employees. Employers cannot contract their way out of this requirement.

There is a provision of the statute that appears to allow a “valid set-off.” A valid set-off is a little like sasquatch. Such a creature may exist, but no one can prove it. The Attorney General of Massachusetts has taken a very strict reading of what could constitute a valid set-off. And the Courts have followed the Attorney General’s lead.

The Supreme Judicial Court recently endorsed this line of thinking in the case of Camara v. Attorney General, 458 Mass. 756 (2011). In this case, a disposal service company enacted a policy whereby an employee found at fault for an accident involving a company truck could either to discipline or a fine deducted from wages earned. The policy had the laudable goal of reducing accidents. The company’s statistics showed that the policy worked.

The company argued that the fines were a valid set-off, but the Attorney General and the Supreme Judicial Court disagreed. The Court ruled that there must at least be some form of due process through the court system for such a set-off. However, the company cannot play judge, jury and executioner, as it did in this case. As fair as the company may have intended to be, there is obviously the potential for abuse by unscrupulous employers.

As a result of the ruling, the company had to reimburse the employees for the monies deducted. Additionally, it had to pay fines of $9,410. The result could have been worse. The employees could have sued for automatic triple damages and recovery of their attorneys’ fees and costs of litigation.

This is one of many examples of how employers should be very careful to not violate laws regarding wages paid to employers. There are lawyers whose entire practice area involves finding employers who have committed technical violations of wage statutes and then suing them for triple damages and attorneys fees. These claims often are brought as class actions to maximize the damages recoverable against the employer. The Attorney General also has independent enforcement power, which she uses in certain cases, such as the Camara case. If you are any employer who has any questions about any wages, salary, overtime, vacation time, independent contractor misclassification, etc., call me at 617.338.7000.

By Adam P. Whitney.

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