State Wage Penalties Available for Non-Payment of Federal Overtime

By Kenneth M. Bello and Louise Reohr

A recent case highlights the need for Massachusetts’ employers to tread carefully around the so-called Wage Act, M.G.L. c. 149, § 148.  Under this law, an employee who successfully makes out a claim for non-payment of wages “shall be” awarded automatic treble damages together with litigation costs and attorneys’ fees.  Unlike the FLSA which permits the award of double damages as a liquidated remedy, the treble damages provision of the MA Wage Act is automatic, regardless of any good faith by the employer.  While there remain arguments automatic treble damages is an unconstitutional punitive remedy, to date there is no definitive state court ruling on such a challenge. 

The treble damages was added in the 1990’s and has proved a boon to plaintiffs and their attorneys, as it provides enormous leverage in the context of any litigation.  A recent Federal Court decision — Lambirth v. Advanced Auto, Inc. et al., 2015 WL 6043710 (D.Mass, October 15, 2015) –has even broadened the scope of payments encompassed by the state Wage Act and so subject to the treble damages multiplier.  In essence,  the Federal Court ruled that federal overtime payments should be regarded as “wages” for the purposes of the state Wage Act, even if overtime would not be payable under the parallel Massachusetts’ overtime law.

The term “wages” contained within M.G.L. c. 149, § 148 has been much litigated as it is only vaguely defined in the statute.  M.G.L. c. 149, § 148 simply states that “”wages” shall include any holiday or vacation payments due an employee under an oral or written agreement.”  In Lambirth, the plaintiff, an automotive technician, claimed that he regularly worked in excess of forty hours per week for a period of his employment , but received no premium payment for overtime. He claimed damages for non-payment of overtime as a breach of the FLSA (time and half), and also as a breach of the Wage Act (treble damages), even though there is an express overtime exemption under the Massachusetts Overtime law.  The employer argued that the MA Wage Act was not applicable because the employee had no right to any state (as opposed to FLSA) overtime payment, his position being exempt under the state minimum wage law because it fell within the state “garagemen” exemption.  The court gave short shrift to this argument, finding that “wages” encompassed overtime in its broadest sense, and that there was no statutory language in the Wage Act suggesting that this did not encompass federal overtime.  The result is that even though the failure to pay overtime was not a violation of the MA Overtime law, the individual could still seek treble damages under the MA Wage Act.

On a practical level, the principle underlying this case should only come into play in the unusual situation where (i) there is an overtime exception under MA state law, and (ii) there is no corresponding overtime exemption under the FLSA, and the employer fails to pay overtime required under the FLSA  for a particular position.  That said, the case underscores that the MA Wage Act remains a “trap for the unwary” with its punitive automatic treble damages.  More than ever, it is crucial for employers to ensure that the status of all employees is correctly identified upfront (whether under state or federal law) and that overtime is paid accordingly.