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Archive for February, 2011

MCAD Guidelines Are Not Laws, Rules Supreme Judicial Court

Posted on: February 21st, 2011 by admin No Comments

In a decision issued late last year, the Supreme Judicial Court (SJC) ruled that guidelines issued by the Massachusetts Commission Against Discrimination (MCAD) do not have the force of law.  Global NAPs, Inc. v. Awiszus, 457 Mass. 489 (2010). The Guidelines have widely been used by attorneys, workers, and employers to understand the scope and meaning of laws enforced by the MCAD, including the anti-discrimination law (M.G.L. c. 151B) and the Massachusetts Maternity Leave Act (MMLA, M.G.L. c. 149 § 105D).

Under the MMLA, female employees are entitled to maternity leave for “a period not exceeding eight weeks,” following which they are to be restored to their pre-leave positions.  The Global NAPs case concerned whether an MCAD guideline could add a notice provision to the MMLA.  The employer in Global NAPs had approved a maternity leave greater than eight weeks, but subsequently terminated the employee prior to her return to work.  The Guideline required employers to inform employees if MMLA protection did not apply to maternity leave over 8 weeks.  The SJC ruled that the MMLA statute did not support the Guideline’s notice provision because the language of the statue expressly limited the maternity leave period to eight weeks.  The Court also held that an MCAD Guideline cannot alone form the basis for a notice provision that is not otherwise supported in the law.  Following what other court decisions have observed, the SJC held that MCAD Guidelines are entitled only to “substantial deference.”  Dahill v. Police Dept. of Boston, 434 Mass. 233 (2001).  As a result, the Court found that the employer did not violate the MMLA by failing to give notice that it would not extend the job restoration provision of the MMLA beyond the mandatory eight week period.

Interestingly, this determination did not come in the underlying employment discrimination action but rather from an appeal in a professional liability (legal malpractice) action filed by the losing employer against their former counsel for their lawyer’s failure to timely appeal the underlying jury verdict against Global NAPs.  In sum, the SJC found that had Global NAPs lawyers filed a timely appeal, they would have prevailed in overturning the jury verdict because the jury instructions impermissibly relied on the notice provisions set forth in the MCAD Guidelines.

Chapter 151B § 3(5) grants the MCAD the authority to create antidiscrimination regulations.  The MCAD has used this authority not only to create regulations, but also to create guidelines, such as the one at issue in Global NAPs.  A key  difference between the two lies in the process used to create them; Guidelines are written and published by MCAD, while regulations are subject to the requirements of the Administrative Procedure Act (M.G.L. c. 30A), which mandates public hearings, notice, impact studies, advisory rulings, and other formal proceedings prior to the adoption and publication of a binding regulation.

As a result of this case, the MCAD is in the process of rewriting its Guidelines into legally-enforceable regulations.  Employers and workers are cautioned that MCAD Guidelines do not necessarily reflect enforceable law, and will no doubt change during their conversion to regulations.  For current MCAD Regulations and MCAD Guidelines, please visit http://www.mass.gov/mcad/forms.html.

* Bennett & Belfort, P.C., wishes to thank our intern, David J. Mattern, for his work on this entry.

FAILURE TO MAKE SEVERANCE PAYMENTS VIOLATES THE MASSACHUSETTS PAYMENT OF WAGES ACT

Posted on: February 14th, 2011 by admin No Comments

For the first time in a Massachusetts reported decision, Worcester Superior Court Judge, Dennis J. Curran, included severance pay in the definition of “wages” for purposes of the Massachusetts Payment of Wages Act (“the Act”).  In Juergens v. MicroGroup, Inc., an employee sought to enforce a severance agreement, successfully arguing that his severance pay qualified as “wages,” which would entitle him to triple damages and reasonable attorney’s fees under the Act.  The employer filed a motion to dismiss Juergens’ claim, and relied upon a 2003 Appeals Court decision, Prozinski v. Northeast Real Estate Services, LLC, 59 Mass. App. Ct. 599 (2003), which held that severance payments were not “wages” under the Act.  Judge Curran denied the employer’s motion to dismiss Juergens’ claim, adopting an expanded meaning of “wages” under the Act.

Judge Curran found that Prozinski was not controlling because it was overruled by a 2005 Supreme Judicial Court decision, Wiedmann v. Bradford Group, Inc.,444 Mass. 698, 831 NE 2d 304 (2005).  In Weidmann, the Supreme Judicial Court held that an employee’s commissions were “wages” under the Act because they were due, owing, and definitely determined.  Judge Curran opined that Weidmann commanded a broader interpretation of the meaning of the word “wages” under the Act.   Juergens is the first time that a court in Massachusetts has ruled that severance pay constitutes “wages” under the Act.

Interestingly, while most severance arrangements are negotiated at or near the conclusion of the employment relationship, Juergens negotiated for a severance payment at the beginning of his employment relationship. Thus, Juergens and his employer agreed from the inception of his employment that in the event Juergens was ever terminated (other than for cause), he would be paid a severance.

Judge Curran did not specifically state that his decision was based upon the fact that Juergens may have relied on the offer of severance pay in reaching an agreement to accept the job, although that fact is sure to predominate the analysis.  It is telling that the employer agreed from the beginning of the employment relationship that Juergens would receive a severance payment if he was terminated.  Could this relatively narrow fact pattern explain Judge Curran’s decision?  Or, might this be a trend that higher courts will follow in expanding the definition of “wages” under the Act?

The significance of the Juergens decision is that, if upheld on appeal, an employer’s failure to timely remit severance payments which are considered “wages,” would give rise to powerful damages and legal remedies.  Under the Act, a prevailing employee can recover three times the actual wages improperly withheld, costs of collection, and reimbursement of his or her reasonable attorney’s fees.  Thus, if the Juergens decision is upheld, employers would face significant liability for violations of the Act relative to severance payments.  Prior to the Juergens decision, employees seeking to enforce a breach of a severance agreement would be limited to recovery of their severance payments alone (and potentially attorney’s fees and costs in the unlikely event that the severance agreement provided for these remedies).

We will need to wait and see if the appeals courts affirm Judge Curran’s decision in Juergens, or if the higher courts revert to Prozinski, and exclude severance payments from the definition of “wages” under the Act.