The Massachusetts Wage Act imposes strict deadlines for paying wages, and inadvertent or short delays can create significant liability. In fact, even if an employee is paid only a day late, the employer has violated the Wage Act and thus owes the employee another two times the wages paid, plus attorneys’ fees. Accordingly, Massachusetts employers should take a fresh look at their payroll practices to make sure they are timely and properly paying their employees.
When Must Employees Be Paid After the Pay Period Closes?
As a general rule, an employee who works five or six days in a calendar week must receive wages within six days after the end of the pay period. An employee who works seven days in a calendar week and “casual employees” must be paid within seven days after the end of the pay period. A “casual employee” is defined by the statute as an employee who has worked fewer than five days a week.
An employer’s internal “payroll close,” timecard approval process, or payroll vendor processing schedule does not extend the statutory deadline. Employers should work backward from the Wage Act deadline when establishing their payroll calendars.
How often does an employee have to be paid?
For hourly workers, the Wage Act requires employees to be paid weekly or biweekly (i.e., every other week). Exempt employees (bona fide executive, administrative and professional employees, and certain employees whose salaries are regularly paid on a weekly basis or at a weekly rate) may be paid weekly, biweekly or semi-monthly (i.e., two times a month) and the employee – not the employer – may consent to be paid monthly.
How does separation from employment affect these deadlines?
Employers should also remember the Wage Act’s special rules concerning separation from employment. An employee who resigns must be paid in full on the next regular payday, while an employee who is involuntarily discharged must receive all earned wages on the date of discharge. This includes both wages and all accrued but unused vacation time.
What are the penalties of being late?
Massachusetts employers should not treat a missed payday as a minor administrative problem that can be cured by simply paying the employee a few days later. The Wage Act provides mandatory treble damages, as well as costs and reasonable attorneys’ fees for all violations, including paying an employee late. In other words, once wages are paid late, just correcting the payroll error does not eliminate Wage Act liability and carry an additional double damages (i.e. double the wages paid).
These types of violations can increase quickly if the error occurs across the workforce and/or occurs over multiple payroll periods. For example, if an employer has 50 employees that are each paid an average of $1,000 per week, a late payroll of even one day can mean $100,000 in penalties (50 x $1,000 x 2), plus attorneys’ fees. Based on this example, it is easy to see why these types of violations, if occurring over even a short period of time, could create significant financial exposure.
What Should Employers Do?
Massachusetts employers should review all of their payroll policies, including:
- Payroll calendars to confirm that payday falls within the statutory period following the end of each pay period;
- Payroll cutoff procedures to ensure internal processing deadlines do not cause wages to be paid outside the statutory period;
- Employee classifications and pay frequencies, particularly for employees paid semi-monthly or monthly;
- Termination policies/procedures so that payroll is notified sufficiently in advance of an involuntary termination to have final wages available on the termination date; and
- Payroll-vendor arrangements, recognizing that an outside vendor’s processing delay does not change the employer’s Wage Act obligations.
Conclusion
Massachusetts employers should treat Wage Act compliance as a core payroll and risk-management obligation. The statute requires timely payment within specific deadlines, and internal payroll procedures, cash-flow concerns, timecard approvals, or vendor delays do not extend those obligations. Because even short delays can trigger mandatory double damages, attorneys’ fees, and costs, employers should regularly review their payroll practices and procedures to ensure compliance. Proactive review can help reduce litigation risk and avoid the costly consequences of being “a little late.”
David Robinson is a shareholder at the firm and chair of the Employment Practice Group. He focuses his practice on litigation of complex commercial, employment, and construction matters, representing businesses in disputes ranging from wage and hour claims and discrimination to contract and shareholder issues, while also advising employers on compliance, workplace investigations, and government audits. He can be reached at (617) 570-3562 or dwr@riw.com.
