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April 24, 2008
Massachusetts Triple Damages Bill Becomes Law
Governor Deval Patrick recently angered the state's employer community when he let a controversial bill slip into law without his signature. The measure, Senate Bill 1059, "An Act to Clarify the Law Protecting Employee Compensation," allows employees to collect treble damages for violations of the Massachusetts wage payment laws, including the prevailing wage law; the law setting wages for building maintenance companies with state contracts; the minimum wage law; the overtime law; the law requiring timely payment of wages; and the law governing disputes about bonuses and commissions.

Until now, under a 2005 decision of the Massachusetts Supreme Court, awards of triple damages were within the discretion of judges presiding over wage cases, who could take into account factors such as whether the company acted in good faith or in willful violation.

The bill hit a roadblock earlier this year when Patrick, instead of signing it, returned the proposal to lawmakers suggesting that it be amended to allow employers to show clear and convincing evidence that they acted in good faith. Both chambers of the legislature rejected his recommendations, and the bill went back to Patrick's desk on April 3. By refusing to act on the bill, Patrick allowed it to become law without his signature.

Patrick explained his actions in a letter to lawmakers. "I am allowing the bill to become law because I support efforts to ensure that all workers are paid the wages and compensation legally owed them. I am declining to sign the bill because I remain concerned that mandatory treble damages in all cases, without exception for employers who act in good faith, is unfairly punitive."

Reactions. The Associated Industries of Massachusetts, a prominent voice for employers, stated that it was "very disappointed and troubled" by the Governor's action in allowing the bill to become law. "We are puzzled as to what has changed since he initially opposed the bill as drafted and proposed amending it to provide a 'good faith' exemption from treble damages," AIM said in a statement.

The Massachusetts AFL-CIO and the Massachusetts office of the Service Employees Industrial Union did not return calls.

Several prominent law firms representing employers noted the tidal wave of wage and hour litigation that is now sweeping through the nation's judicial system. Collective actions raising wage-hour issues have already outstripped actions for race, sex, and religious discrimination. Law firm Seyfarth Shaw predicted that, because of the passage of this bill, plaintiffs' lawyers from Massachusetts and around the country may bring wage and hour claims against Bay State employers to take advantage of the new damages provisions. As a result, employers are advised to scrutinize their wage payment practices and their classifications of employees who are exempt, or not exempt, from overtime.

The new law will take effect on July 13, 2008.

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