Massachusetts SJC Takes Interest in Wage Act Claims

On June 26, 2017, the Massachusetts Supreme Judicial Court issued its decision in the case of George, et. al. v. National Water Main Cleaning Company, which addressed the question of whether statutory prejudgment interest is available for claims brought under the Massachusetts Wage Act. The underlying case involved a class action brought by a group of employees against their employer for nonpayment of wages. The SJC, which heard the case as a certified question of law from the United States District Court for the District of Massachusetts, held that interest should be added to the amount of lost wages and other benefits awarded as damages, but not to the additional amount of the award arising from the trebling of damages under the statute.

In issuing its decision, the Court considered the legislative history of the Wage Act and its damages provisions. In particular, it noted that in 2008, the statutory interest language was amended to make treble damages mandatory as “liquidated damages.” The debate between the parties was whether the characterization of the damages as “liquidated” precluded the application of statutory prejudgment interest. The Court found that it did not, holding that to interpret “liquidated” in a way that would preclude prejudgment interest would be to impliedly repeal the interest statutes. Instead of taking such a drastic measure, the Court found that the two statutes could be read in harmony by applying prejudgment interest only to the portion of the award reflecting lost wages and benefits, not to the portion reflecting liquidated damages.

Although the Court’s holding means employers won’t be hit with interest on the treble damages portion of a Wage Act claim, Massachusetts employers should still take great care to comply with the requirements of the Wage Act in order to minimize potential liability.

– Lauren Corbett

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