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Archive for the ‘Employment Law Blog – MA’ Category

Massachusetts’ Highest Court Rules No Double Recovery Allowed for Back Wages

Posted on: August 5th, 2020

By: Zinnia Khan

On July 14, 2020, the Supreme Judicial Court (“SJC”) of Massachusetts held employees cannot recover unpaid back wages under two different Massachusetts wage laws because doing so would amount to a double recovery with the same set of allegations.

The ruling in Donis v. American Waste Services LLC, et al. (SJC-12842) reversed a lower court’s decision and differed from guidance issued by Massachusetts Attorney General Maura Healy.  The SJC looked at whether the plaintiffs, “shakers” who operated waste trucks and hydraulic levers for American Waste Services LLC, were entitled to damages under both the Prevailing Wage Act (G.L. c. 149, §§ 26-27) and the Commonwealth’s more general Wage Act (G.L. c. 149, § 148).  While the Wage Act has a broader application, the Prevailing Wage act applies only to employees working on certain public works projects.

The Donis plaintiffs claimed that the defendant employers failed to pay them at the rates required by the Prevailing Wage Act.  There was, however, no basis provided for a violation of the Wage act other than this specific violation of the Prevailing Wage Act.  Before the matter reached the SJC, the Massachusetts Appeals Court found the language in the Wage Act was broad enough to allow the plaintiffs to recover money under that statute.  Defendant American Waste Services appealed on the question of whether the plaintiffs could recover under both the Wage Act and the Prevailing Wage Act.

Breaking with the Appeals Court, the SJC noted the Prevailing Wage Act “already provides its own remedy.”  Accordingly, it held the plaintiffs were entitled to damages only under the Prevailing Wage Act.  They could not recoup damages under the Wage Act, which would have enabled them to also hold the defendants’ officers liable for the back pay owed.

The SJC’s decision also looked to legislative intent.  The SJC noted that, since the legislature specifically carved out the Prevailing Wage Act as a separate law with certain remedies for the types of claims the plaintiff employees brought against American Waste Services, that was the only law under which they could recover the back pay they were owed.

The court also disagreed with the Office of Attorney General Maura Healy, which filed a brief in support of the workers stating that employers must comply with both the Wage Act and any other relevant employment laws and obligations.

The SJC’s decision to curtail double recovery under the two statutes and confirm that the Prevailing Wage Act has its own comprehensive scheme for regulating payments will be reassuring to employers.  Even so, we advise businesses to exercise caution and ensure compliance with all applicable wage and hour laws, including the more broadly tailored Wage Act. 

If you have questions or would like more information, please contact Zinnia Khan at [email protected].

Agreement to Arbitrate Enforceable Even After Termination of Agreement with Assisted-Living Facility

Posted on: July 1st, 2020

By: Kevin Kenneally, Janet Barringer and William Gildea

The United States Court of Appeals for the First Circuit has upheld a challenge to the enforceability of an arbitration agreement in the senior living facility and long-term care (LTC) arena. In Biller v. S-H OpCo Greenwich Bay Manor, LLC, No. 19-1865, 2020 U.S. App. LEXIS 17735, at *1 (1st Cir. June 5, 2020) (“Biller”), the First Circuit determined an arbitration clause in a residency agreement was enforceable after the LTC resident had ceased receiving care at the facility.  With this decision, facilities will have clarity about the agreements and can rely on the contractual terms with its residents to arbitrate applicable claims, even after a resident may leave the facility. The decision should further dissuade residents from challenging arbitration clauses and reduce unnecessary litigation costs.

In Biller, the plaintiff moved into the assisted-living facility in 2016 where the plaintiff’s daughter and attorney-in-fact signed the residency agreement on her mother’s behalf. The residency agreement, among other things, stated that “it would continue indefinitely, but that either party could terminate it ‘immediately upon written notice in the event of [Plaintiff’s] death or if [she] must be relocated due to [her] health.’” Biller, supra at * 2.  The residency agreement included an arbitration provision stating, in part:

Any and all claims or controversies arising out of, or in any way relating to, this Agreement or any of your stays at the Community…. shall be submitted to binding arbitration, as provided below, and shall not be filed in a court of law…. The parties to this Agreement further understand that a judge and/or jury will not decide their case.

Id., at * 3 (emphasis in original). More than one year after moving into the defendant facility, the plaintiff alleges she suffered serious health complications due to the failure of the facility’s staff to properly administer prescribed medication. The plaintiff eventually was admitted to the hospital, and she vacated the facility permanently. 

The plaintiff brought claims under Rhode Island state law arising out of the facility’s alleged negligent administration of prescription drugs. The facility removed the action to federal court and simultaneously moved to compel arbitration. The facility resident opposed the motion to compel arbitration asserting the arbitration agreement “wasn’t in effect” between the plaintiff and the facility, in part, and claiming the agreement terminated when the plaintiff left the original unit.  The ALF facility in turn argued “the termination clause in the residency agreement had not been triggered, because [plaintiff] merely ‘receiv[ed] different services over time at the same facility’ throughout her stay; and there was no superseding agreement, because the March 2016 residency agreement contemplated additional services and fees.” Biller, supra at * 6.

The United States District Court, District of Rhode Island, denied the facility’s motion to compel arbitration because, in its view, the residency agreement terminated when the plaintiff moved to a different unit within the facility. The First Circuit Court of Appeals in Biller, however, reversed the District Court’s decision. Biller held plaintiff failed to “mount an ‘independent’ challenge to the arbitration agreement itself” and the plaintiff did not “identif[y] evidence that the parties intended not only the residency agreement but also their arbitration obligations to lapse when [plaintiff] relocated (or at some other time before [the facility] sought to invoke arbitration).” Biller, supra at * 21 (internal citations omitted).

The First Circuit Court of Appeals’ decision in Biller bolsters assisted-living facilities and other long-term care centers’ right to enforce arbitration, even after moving out. Unless a resident or the respective representative is able to establish the parties’ intent at contract formation that arbitration obligations terminate upon expiration of a residency agreement, claims arising out of the agreement should remain arbitrable.

If you have questions or would like more information, please contact Kevin Kenneally at [email protected], Janet Barringer at [email protected] or William Gildea at [email protected].

Massachusetts Joins Jurisdictions Prohibiting Class-Wide Arbitration of Wage Claims Absent Agreement Expressly Permitting Class Actions

Posted on: May 18th, 2020

By: Kevin Kenneally, Janet Barringer and William Gildea

In a further blow to class action claimants and lawyers, a Massachusetts Superior Court Judge recently ruled a car salesman could not arbitrate Wage Act claims on behalf of coworkers absent an express provision in the employment agreement permitting such a class action.   In Grieco Enterprises, Inc. v. McNamara, the employer sought a declaratory judgment ruling that an employee could not arbitrate wage claims on behalf of a putative class of employees even if his employment contract was silent on the issue and did not expressly prohibit or allow for such a class action. This favorable outcome for employers and insurers follows a similar 2019 ruling by the Supreme Court of the United States holding an ambiguous employment agreement cannot be the basis to compel class-wide arbitration.

In the Massachusetts state court arbitration matter, the employee claimed his employer failed to pay him—and others—required overtime and Sunday-hours premium in violation of state wage laws.  He demanded arbitration on behalf of himself and other similarly-situated commission-only salespeople.  In response, the employer filed the declaratory judgment action in Massachusetts state court seeking determination whether a class action in this instance is permissible.  The Massachusetts Superior Court held class action arbitration is not permissible because the parties’ employment agreement did not expressly permit employees to arbitrate class actions.  The Court held the employee may proceed to arbitration solely on an individual basis. 

The decision in McNamara is garnering attention due to the state’s decision last year concerning commission-based salespeople, Sullivan v. Sleepy’s LLC.  In Sleepy’s, the Massachusetts Supreme Judicial Court held commission-paid retail salespeople are entitled to “time-and-a-half” overtime compensation based on the statutory minimum wage — even when their commissions always met or exceeded the state minimum.  Sleepy’s specifically held the overtime and Sunday premium wage statutes applied to commission-paid sales staff.  The McNamara claimant sought to apply this ruling to an entire class of workers rather than having each worker bring an individual claim.  The employment agreement at issue contained a general statement in the agreement it was “in conformity with” Massachusetts Rules of Civil Procedure—which claimant contended includes procedural rules for class actions, thus tacitly subjecting the employer to class arbitration.  The Superior Court rejected the argument and held the parties to the contract did not expressly agree to engage in class action arbitration.  The judge in McNamara held that if she were to permit the application of an unclear provision to authorize class actions, “unrepresented employees could be bound by an arbitration that he or she did not individually consent to participate in.  Such a result is contrary to the legal underpinnings for arbitration, specifically that it is a consensual contractual matter.”

In 2019, the U.S. Supreme Court decided Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 587 US __, 203 L. Ed. 2d 636  (2019), which was seen as a setback to workers’ ability to join or aggregate the individual claims of other workers who had agreed in their employment contracts to an arbitration forum.  Lamps Plus held in claims subject to the Federal Arbitration Act (“FAA”) an ambiguous agreement cannot be the necessary contractually-agreed basis to force an employer to submit to class-wide arbitration.  The high court agreed with the employer there simply was no foundational agreement to arbitrate the class action and the lower court acted contrary to the primary purpose of the FAA.  Lamps Plus held a lower court may not compel arbitration on a class-wide basis when an agreement is “silent” on the availability of such arbitration and “that private agreements to arbitrate are enforced according to their terms.”  

Employers who incorporate arbitration provisions in their employment agreements for individual basis only will benefit by the uniform application of law in both state and federal courts.  Employers in Massachusetts have certainty absent a specific provision – or even in the face of a vague arbitration provision – class-wide arbitration will not be available to employees whether the claims are based on federal or state law.

If you have questions or would like more information, please contact Kevin Kenneally at [email protected], Janet Barringer at [email protected] or William Gildea at [email protected].

U.S. Department of Education Announces Temporary Halting of Wage Garnishments

Posted on: March 30th, 2020

By: Jeffrey A. Hord

On March 25, 2020, the Department of Education (DOE) announced that it will temporarily halt seizing wages and/or withholding tax refunds from borrowers who have defaulted on their student loans held by the federal government.  As part of the Trump Administration’s multifaceted response to the COVID-19 national emergency, the DOE has suspended any wage garnishments and stopped all requests to the U.S. Treasury Department to withhold money from defaulted borrowers.  The directive is retroactive to March 13, 2020, and will last for a period of at least sixty (60) days.  The DOE also instructed private collection agencies to stop all “proactive collection activities,” including making phone calls to borrowers and issuing collection letters and billing statements.

Employers who are responsible for properly processing wage garnishments should take note of this announcement.  In its official press release, the DOE emphasized that, while borrowers whose paychecks were being garnished will now be entitled to their full wage, it is the responsibility of the employer to make the necessary change to the employee’s paycheck:

“The Department must rely on employers to make the change to borrowers’ paychecks, so it will monitor employers’ compliance with the request to stop wage garnishment. Borrowers whose wages continue to be garnished after March 13 should contact their employers’ human resources department.”

While the directive unambiguously prohibits “new” wage garnishments, Social Security offsets, and collection actions, the DOE’s announcement leaves some room for doubt as to whether garnishments and offsets put into effect prior to March 13, 2020 are similarly impacted.  However, in a contemporaneous set of FAQ published on the DOE’s official Federal Student Aid website, the Department seemed to clearly signal its intent:

If your wages continue to be garnished after the president’s March 13, 2020, announcement, you should contact your employer’s human resources department. If DOE receives funds from your paycheck that should have been stopped as a result of the March 13 announcement, we will refund your garnished wages.

The good news for employers who make payments towards their employees’ outstanding student loans as a benefit of employment is that they can now do so tax-free until January 1, 2021, for up to $5,250 annually.

Additional Information:

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues on a regular basis.  On April 2, we will discuss the impact of Coronavirus on law enforcement.  Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Employers Watch Out: New DOL Rule May Limit Joint Employer Liability

Posted on: January 27th, 2020

By: Janet Barringer

New Rule

A new rule goes into effect March 16, 2020, per the Department of Labor (DOL), as to when a “joint employer” is equally liable under federal wage and hour laws.  This new rule is an attempt to limit “joint employer” liability.  The determination as to whether a scenario is one of joint employment turns on a new four-factor test.

The test asks DOES THE BUSINESS IN QUESTION:

  1. Hire or terminate the employee, which is not to be confused with the “power” to hire or fire the employee;
  2. Supervise and control the employee’s schedule or conditions of employment to a substantial degree;
  3. Determine the employee’s rates and methods of payment; and
  4. Maintain the employee’s personnel/employment records.

According to the DOL, no single factor is dispositive in determining joint-employer status.  Instead, the weight given to each of the four factors depends on the circumstances at hand.  Most likely, Courts will decide the balancing test among these four factors, as the DOL has provided little guidance on how to do so.

Beware of Catch-all Provision

Employers should be aware there is an alternative “catch-all” provision in the DOL rule which states factors not specifically included in the four-part test may be considered in the determination of whether a joint employment relationship exists.  However, this catch-all provision only applies if the potential joint employer exercises “significant control” over the terms and conditions of the employee’s work.  The practical application of this catch-all provision remains to be seen, and will likely depend on Courts’ interpretation.

Employers Excluded under New Rule

The DOL helpfully included in its guidance several common business arrangements not factored into its analysis of a potential joint employment relationship.  These include the following factors:

  1. Existence of a franchisee/franchisor relationship, including entering into a brand and supply agreement;
  2. An unexercised right to control the employee’s terms and conditions of employment. Standard contractual language reserving a right to act will not be enough to establish a joint employment arrangement under the four-factor test;
  3. The employee’s economic dependence on the potential joint employer, including whether the employee is in a specialized position or has the opportunity to make a profit or incur a loss based on performance;
  4. A potential joint employer’s contractual agreements requiring the employer to comply with specific legal obligations or meet certain standards to protect the health and safety of its employees, i.e., compliance with wage and hour laws or maintenance of sexual harassment policies;
  5. Management of quality control standards implemented by the potential joint employer, such as standards ensuring the consistent quality of products;
  6. Whether the potential joint employer provides standardized human resources forms, including employee handbook templates;
  7. A potential joint employer’s offer of health or retirement plans to the employer or participation in such plans with the employer; or
  8. Joint participation in an apprenticeship program with the employer.

Safeguards for Employers to Take Before March 16, 2020

Before the new rule for joint employer goes into effect on March 16, 2020, businesses should take account of their procedures to confirm they are protected under the rule’s four-factor test. Employers should also consider working with their counsel to determine, and create, if necessary, business changes to maximize their ability in taking advantage of the new joint employment standard.  The updated rule may provide more flexibility and certainty when it comes to employers’ wage and hour responsibilities.

If you have any questions or would like more information, please contact Janet Barringer in the National Labor & Employment Practice Section at [email protected].