SJC decides on Wage Act preemption concerns

August 26, 2013

The Supreme Judicial Court has shed some light on preemption issues concerning the Wage Act, G.L.c. 149, §§148, 150. The Court reversed a recent ruling in an employment contract case in which the lower court ruled that the Wage Act preempted common-law claims for employment-related compensation in Massachusetts. The SJC held that the Wage Act is not the exclusive remedy for recovery of unpaid wages, which opened the door for the employee to pursue his claim under established common-law principles
In the case, (Lipsitt v. Plaud), the employee brought claims for nonpayment of wages arising out of his employment relationship with his employer. The employer first hired the employee in 2004, after which the employer's business immediately began experiencing financial difficulties. As a result the employer failed to t pay the the employee ampunts alleged to be due under the parties' agreement. The employee's "Wage Act:" claims were barred by the applicable three-year statute of limitations, and ththe employer sought dismissal of the common law claims, (including contract, quantum meruit and promissory estoppel) based upon the employer's position that the Wage Act was the sole and exclusive remedy for wage violations.

The Superior Court dismissed the common law claims, having found "scant authority" on which to rely to suggest that common law claims could survive if based upon failure to pay wages.

On appeal however, the SJC held that that the common-law claims were viable and should not have been dismissed. In so holding, the Court stated"it is well established that 'an existing common law remedy is not to be taken away by statute unless by direct enactment or necessary implication'. The Court found neither to exist in review of the Wage Act history. The court reasoned that where the legislature did not explicitly limit common-law claims when enacting the Wage Act, the purpose of the Wage Act is not undermined by common-law claims and it is not inconsistent with public policy to allow common law claims. The court added, "[p]articularly where an employee's Wage Act claims are time barred, we see no good reason why, given the strong presumption against implied abrogation of the common law, that employee cannot seek to recover those unpaid wages by bringing a contract or quasi-contract claim."

If it was not clear from prior cases, the Lipsett case undoubtedly provides Massachusetts employees with another remedial tool for claims arising from non-payment of wages.