City Employer Cannot Deny Retired Employee Value of Earned Compensatory Time

April 24, 2014

The Massachusetts Wage Act has teeth. Among other things, it helps ensure that employers timely pay employees all earned wages, as that term is broadly defined, under the threat of mandatory triple damages, attorney's fees, and costs of litigation for violation of the Act. Leaving little opportunity for employers to avoid their pay obligations to employees, the Act specifically prohibits an employer from entering into a contract with an employee that exempts the employer from his Wage Act obligations.

Earlier this month, the Massachusetts Appeals Court struck down two arguments advanced by an employer to justify the employer's non-payment of wages to an employee. In Plourde v. Police Dept. of Lawrence, the plaintiff had been a police officer with the Lawrence Police Department (LPD) for twenty-five years. Pursuant to the terms of his collective bargaining agreement (CBA), the plaintiff was permitted and elected to work additional shifts, separate from his salaried work. The CBA referred to these extra shifts as "overtime." The LPD's policies and practices permitted officers to elect to receive compensatory time in lieu of wages for the overtime shifts. Throughout his employment, the plaintiff often elected to take compensatory time.

In 2006, the plaintiff was injured on the job, and remained out of work on disability leave until his retirement in 2010. At the time of his injury, he had accrued 261.5 hours of compensatory time. Although the LPD paid the plaintiff his accumulated sick time leave at the time of his retirement, it refused to pay him the value of his unused compensatory time accrued from his overtime shifts.

The plaintiff sued the LPD, claiming that its failure to pay him his earned wages was a violation of the Wage Act. A superior court judge entered summary judgment for LPD on two grounds: (1) that, as an extension of the city of Lawrence, LPD's sovereign immunity made it immune from the plaintiff's claims; and (2) that a special act, known as the Lawrence Act, precluded the plaintiff from receiving compensatory time in a budgetary allotment period other than the one in which the compensatory time was earned. The Appeals Court reversed, striking down both theories.

The Appeals Court quickly disposed of the sovereign immunity argument, stating that "it is well settled that municipalities are subject to the Wage Act, a matter of law which [LPD] does not contest." The remainder of the decision focused on LPD's strained interpretation of the Lawrence Act against the Wage Act.

The Lawrence Act was designed to ensure the fiscal stability of the city of Lawrence, by putting certain financial conditions in place relative to city personnel expenses and budget allocations. In particular, it requires that any personnel expenses earned or accrued were not to be paid from a financial allotment from a subsequent period without written approval from the mayor, with certain exceptions not applicable here. LPD argued that, because the plaintiff had not received the written permission from the mayor to carry his compensatory time over from previous periods, he could not now collect it.

The Appeals Court rejected this "use it or lose it" interpretation. First, although the Lawrence Act was incorporated into the CBA, the Appeals Court noted that the Wage Act prohibited the contracting away of LPD's obligations to pay its employees their earned wages. Second, the court held that, contrary to LPD's arguments, the Lawrence Act did not supersede the inconsistent terms of the Wage Act. The Appeals Court also observed that the record lacked evidence that the terms of the Lawrence Act had even come into play.

The Appeals Court then analyzed the logical impact of LPD's argument, noting that, if it were correct that the Lawrence Act prevailed over the Wage Act, then employees would be forced to use all earned vacation, sick, and compensatory time before the end of each two-to-three-month allotment period, if the mayor refused to permit a carryover. As it explained, "[I]t strains credulity to suggest that a special act designed to ensure Lawrence's fiscal health would mandate such bureaucratic inefficiency, forcing each of Lawrence's numerous department heads, or their employees, to obtain the mayor's signature, every two or three months, for all Lawrence's employees to keep their accrued sick, vacation, and compensatory time and, in default thereof, potentially unsuspecting employees falling into a 'use it or lose it' trap whereby earned but accrued compensatory time, in lieu of wages, would be lost."

Finally, although LPD's interpretation would not have required it to pay the plaintiff his accumulated sick time upon retirement either, the LPD paid the value of that time to the plaintiff without issue. The Appeals Court refused to permit LPD to arbitrarily invoke the Lawrence Act to shield itself from its statutory duty to pay the plaintiff his accrued compensatory time.

Because of the harsh penalties imposed on them for violations under the Wage Act - regardless of whether those violations were intentional or innocent - employers should be well educated about the scope of their obligations to employees. As this case illustrates, once a Wage Act violation occurs, there are few legal arguments available to an employer defending against a lawsuit for non-payment of wages.