Articles Posted in Wage Act

A hotel in Pittsfield recently struck a settlement with 150 current and former employees — food and beverage workers — over an argument about tips that weren’t passed along from the hotel to the workers, according to the The Berkshire Eagle.

Overtime and wage recovery in Massachusetts is a big deal for employees, especially in this tough economic climate. When money is tight all around, workers must be paid promptly and properly.
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At the same time, companies are trying to be as efficient as possible in order to ensure that they can be successful long-term. Sometimes, that includes exploring ways to save money. When it comes to wages, small businesses must be careful to be 100 percent sure they can legally cut where they’re trying to cut.

In either situation, an experienced Boston wage lawyer can be consulted to ensure employees are compensated fairly and employers are operating within the law. Whether that means reviewing a company’s policies and books to determine if they are in compliance with state and federal wage laws or representing an employee who feels they have been ripped off, the skills and experience of a lawyer can be used to sort out the conflict.

According to The Fair Labor Standards Act, employees must adhere to paying minimum wage and overtime in certain scenarios. There are exceptions to overtime, depending on the circumstances.

According to the law, tipped employees — who take home more than $30 per month in tips — must be paid at least $2.13 per hour if they claim a tip credit. The federal minimum wage is $7.25 per hour for those 21 and older. Tipped employees typically include waiters and waitresses, hotel workers, valet workers and others in the hospitality industry. The Department of Labor provides information online for both employers and tip employees to rectify common problems with this setup.

In the situation in Pittsfield, hotel workers agreed on a settlement of $1.3 million — of which they will receive $850,000 to split after attorneys fees. How much each employee receives depends on how long they worked at the hotel during the period covered in the lawsuit — November 2006 to June 2010.

Massachusetts employment lawyers say that about one-third of the 20 percent service charges that are billed to patrons at the hotel were withheld. The hotel is saying that they have proof to defend the lawsuit and that the case was based on a “misunderstanding.” But the company and its insurance provider decided to settle.

The whistleblower claimed that he started getting suspicious when the hotel’s accounting department couldn’t provide a straight answer about how much workers got paid for events they worked. Since these tipped workers make a low wage, their tips are important, he said.

When conflicts arise in wage issues, it’s important for each side to have sound legal advice. Sometimes, these issues can be worked out internally. Other times, the conflict requires litigation. In either situation, employees and employers must trust an experienced Boston employment lawyer.
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While traditional severance pay falls outside of the Wage Act in Massachusetts, not all payments pursuant to a termination of employment are excluded. This is significant because, in a dispute with an employer, courts may award up to treble damages as well as reasonable attorney’s fees and costs under the Wage Act.

It is not uncommon with start-up companies and businesses facing financial difficulties in this tough economy that employees are asked to take pay cuts with the promise of making up the difference when finances get better. This can be tricky when the employment relationship is terminated and the employee has not recouped her wage concessions.

Example Employee and Employer voluntarily agreed to reduce the Employee’s compensation by 25% but this amount would accrue as deferred compensation until the employee left the company, provided the company returned to certain levels of financial performance. This arrangement was documented in a letter signed by a corporate officer and the Employee.

The Employee left the company just as the company hit the performance threshold, and the Employer refused to honor the deferred payment arrangement. The Employee has filed suit in Superior Court under the Massachusetts Wage Act for the wrongful withholding of wage payments, seeking treble damages, attorney’s fees and costs.

Issue Does the post-termination payout arrangement contained in the Employee-Employer letter constitute a “wage” whose timely payment was mandated under the Massachusetts Wage Act?

Answer Yes. The post-termination payout letter was drafted in order to compensate the Employee for her regular job performance for a period where she received a reduced rate of pay.

Courts throughout Massachusetts, as well as the United States District Court (D-Mass.), have held that such deferred amounts are ‘vested wage equivalents,’ properly due the employee under the Wage Act. Although it is recognized that executive bonuses and additional, achievement-driven modes of compensation fall outside the scope of the Wage Act, the overall profitability of a company is not a contingency that removes deferred or substituted wage earnings from the Act’s scope. Finally, no successful argument has yet been made that a deferred or substituted payment of wages constitutes Continue reading

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