Under Massachusetts law, individuals employed “in a hotel, motel, motor court or like establishment” are exempt from overtime, meaning that no matter what the worker does and no matter how many hours they work, they are not entitled to overtime under state law. However, companies here in Massachusetts (and in all other states) must also comply with federal law. The federal Fair Labor Standards Act (“FLSA”) contains no exemption to overtime for hotel and motel workers, and such workers are entitled to overtime premium wages for all hours worked in excess of 40 in a week, provided that they or their employer is covered by the FLSA.
Not all businesses in the United States are covered by the federal FLSA. Some small, local businesses are outside the coverage of the federal law. What is the difference between those businesses that are covered by federal overtime law and those that are not? (In this article I am writing about hotels and motels, so I’ll use those terms, but this same rule applies for other businesses). First, when a hotel or motel has more than $500,000 in annual revenues and has at least two employees engaged in commerce, it is a so-called “enterprise” and all of its employees are entitled to overtime, unless otherwise exempt. If a hotel or motel has multiple has multiple locations, you must add together the revenues from each location to determine if the business as a whole sells more than $500,000 per year.
Even if the hotel or motel is very small and is not an “enterprise,” if an individual worker engages in interstate commerce or produces goods for interstate commerce, that individual will be entitled to overtime pay for work in excess of 40 per week.
If you are a hotel or motel worker not being paid overtime wages for overtime work, feel free to reach out to us, and we will evaluate your case at no charge.
The United States Court of Appeals for the First Circuit recently decided the Wage Act commissions case, Ellicott v. American Capital Energy, Inc., No. 17-1421 (1st Cir. 2018). This case is interesting for a few reasons, but I’ll address two here. First, the losing defendants in this case argued that the salesperson’s commission plan, which was based on the profitability of sales he made, fell outside the Wage Act’s protections. Such a distinction has been made in some cases between commissions and “profit-sharing” plans, with the first being subject to Wage Act coverage and the latter outside its coverage and protections. Two cases making that distinction are Suominen v. Goodman Indus. Equities Management, 78 Mass.App.Ct. 723 (2011) and Feygina v. Hallmark Health System, Inc., 31 Mass.L.Rptr. 279 (2013). However, the First Circuit focused on the key elements of the Wage Act related to commissions, the “due and payable” and “definitely determined” requirements, and found that the commissions in this case met both. This case will be key for employees facing the employer defense that a commission will lose Wage Act coverage simply for having a connection to profits. I view this as an important win for employees with unpaid commission cases.
Next, the First Circuit examines the important doctrine of equitable tolling. This doctrine allows an employee’s claims to survive despite being outside the statute of limitations if an employer makes statements that it knew or should have known would lead the employee to delay filing suit and, in reliance on those statements, the employee delays. Here, the employer held meetings with the employee about the commissions and told him that money was tight but that he would be paid if he was patient. The jury found that the defendants “made representations [they] knew or should have known would induce [Ellicott] to put off bringing suit and [he] did in fact delay in reliance on the representations.” Without this finding, Ellicott’s lawsuit would have been too late, but the doctrine of equitable tolling of the statute of limitations saved his claims.
Just a reminder that the statute of limitations for Wage Act claims is three years.
The Massachusetts Attorney General’s new website doesn’t seem to link to the office’s past Wage Act advisories. These advisories have been cited multiple times by the SJC and are entitled to “substantial deference, at least where it is not inconsistent with the plain language of the statutory provisions.” See Smith v. Winter Place LLC, 447 Mass. 363, 368 (2006). So given their importance, I am posting them here by topic:
Minimum Fair Wage (minimum wage and overtime) opinion letters can be found here. And prevailing wage opinion letters, here.
Yesterday, November 2, 2017, the Middlesex Superior Court certified our class action against Trinity EMS, based in Lowell, Massachusetts. In the case, we contend that, among other things, Trinity EMS unlawfully deducted charges for required uniforms from employee wages in violation of the Massachusetts law. The applicable regulation states:
An employee or prospective employee who is required to purchase or rent a uniform shall be reimbursed for the actual purchase or rental cost of the uniform.
454 Code Mass. Regs. 27.05(4)(c).
Any person falling within the following class definition is now a class member in the case:
Individuals employed by Trinity EMS, Inc. who were subjected to deductions from their pay for uniforms at any point between June 29, 2014 and the present.
If you fall within this definition, please reach out to us for more information.
Massachusetts is a good place to start a business, as it is home to many highly educated and entrepreneurial people who are able to team up with similar folks here to start successful businesses. While many of these businesses succeed, others fail. However, employee wages are not contingent on business success and two important principles back that up.
- An employee cannot waive his or her entitlement to wages. Section 148 of the Wage Act prevents an employee from making a deal with a struggling employer to defer or waive payment of wages. This is a so-called “special contract,” and it is not enforceable in a subsequent lawsuit for unpaid wages. These agreements sometimes happen in startup companies struggling with cash flow problems. However, companies prioritize other expenses over wages at their peril. The agreement with the employee to defer or waive wages will not be enforceable, and if that employee decides to sue before being made whole, they will triple the value of their claim (due to mandatory treble damages after the filing of a wage complaint) and the employer will be liable for that employee’s attorneys’ fees.
- Section 148 of the Wage Act also states that “the president and treasurer of a corporation and any officers or agents having the management of such corporation” shall be personally liable for unpaid wages. This means that the officers of a startup company cannot walk away from a failing startup without making sure all employees are paid in full. When this happens–and we see it a lot–the former officers often make strong lawsuit targets, as they often are re-employed or, at the very least, have good earning potential going forward and the ability to pay a large judgment.
The lessons: Startup companies should learn the law of wages and make sure that they pay employees in full and on time. Employees with unpaid wage claims from a failed or failing startup should reach out to our office for a free wage consultation to learn their options.
Generally, employers cannot require that employees participate in job training without pay. CVS recently learned this lesson in the case of St. Pierre, et al. v. CVS Pharmacy, Inc., et al., Civil Action No. 13-13202-TSH (D. Mass. Sept. 18, 2017) (Hillman, J.). CVS Pharmacy required all pharmacy technicians to regularly complete mandatory training courses through an online “learning management system” called LEARNet without pay. The Federal District Court in Massachusetts held that this was unlawful and entered judgment in favor of the employees.
If you have been required to perform unpaid job training, do not sign a release without talking with an attorney, and feel free to reach out to us for a free consultation.