On April 14, 2022, the Massachusetts Supreme Judicial Court (SJC) ruled that when an employee pursues and succeeds on a claim for the failure to pay overtime wages under the Fair Labor Standards Act (FLSA), the employee may not recover treble damages and other remedies under the Massachusetts Wage Act for the failure to pay those wages.

In Devaney v. Zucchini Gold, LLC, the Commonwealth’s highest court reversed the trial court and rejected the plaintiffs’ argument that they were entitled to recover treble damages under the Wage Act based on the defendant’s failure to pay them overtime wages in violation of the FLSA. Because the award of “such [s]tate law remedies would actually conflict with the [f]ederal remedies provided in the FLSA,” and because state courts must “construe … [s]tate laws to avoid preemption [by federal laws] if possible,” the SJC concluded that state law remedies under the Wage Act “are not available under these circumstances.”

The FLSA and the Massachusetts Wage Act

As the SJC observed, the FLSA “‘provides an unusually elaborate enforcement scheme’” for failure to pay overtime and other wages, providing for criminal penalties for willful violations, authorizing workers to file private actions against their employers, and providing for the recovery (in addition to the amount of unpaid wages) of “liquidated damages in an additional equal amount, and costs and attorney’s fees.” Under the FLSA, however, “[a]n employer may escape liquidated damages by showing to the court’s satisfaction that it acted in good faith and had a reasonable ground for believing that it did not violate the FLSA.”

The Wage Act requires the “timely payment of ‘wages earned,’” including overtime wages, and “provides its own enforcement scheme.” Employers that violate the Wage Act are subject to civil and criminal sanctions, and actions to enforce its requirements may be brought by the Commonwealth’s attorney general or by the employees themselves. In addition, as the SJC observed, the remedies available to workers under the Wage Act “are, in some instances, more generous than those available under the FLSA.” For example, employees who succeed in proving claims under the Wage Act are entitled to “a mandatory award of treble damages, as liquidated damages, for any lost wages and other benefits,” and employers may not escape treble damages by showing that they acted in good faith or had reasonable grounds for their actions.

Background Facts and the Trial Court’s Ruling

The plaintiffs in Devaney—Rutchada Devaney, Thewakul Rueangjan, and Thanyathon Wungnak—were employees of the Rice Barn, a Massachusetts restaurant owned by defendant Zucchini Gold, LLC. Although Zucchini Gold had “failed to keep complete, contemporaneous records of the plaintiffs’ hours of work or of wages paid,” as required by federal law and Massachusetts law, the plaintiffs presented testimony and their own records showing that each had worked between fifty and seventy-three hours per week and had not been paid at the overtime rate for hours worked over forty each week.

The plaintiffs filed suit against Zucchini Gold, asserting claims for failure to pay overtime in violation of the FLSA and claims that their employer had violated the Wage Act by failing to pay the FLSA-mandated overtime wages in a timely manner. Crucially, the plaintiffs did not include a claim that Zucchini Gold had violated the Massachusetts overtime statute, because they could not: although the Massachusetts statute is modeled on its federal counterpart, it includes an exemption from overtime obligations for restaurant workers (such as the plaintiffs) that Congress eliminated from the FLSA in 1977. (The Massachusetts Legislature is considering two bills that would eliminate that exemption.)

After awarding summary judgment to the plaintiffs as to the defendants’ liability for failing to pay overtime wages in violation of the FLSA and the Wage Act, the trial court held a jury trial solely on the issue of the plaintiffs’ damages. Following a verdict in favor of the plaintiffs, the trial court awarded each plaintiff treble damages plus attorneys’ fees and costs pursuant to the Wage Act. The defendants timely appealed, and the SJC on its own initiative transferred the case from the Appeals Court.

The SJC’s Analysis

The SJC held that the trial court’s award of treble damages under the Wage Act for failure to pay FLSA-mandated overtime wages had been erroneous. After reviewing and comparing the federal and state statutes’ respective enforcement schemes, the court concluded that permitting an employee “aggrieved by a violation of the [f]ederal overtime law” to recover Massachusetts Wage Act remedies “for untimely payments of wages due solely under the FLSA” would obstruct “‘the accomplishment and execution of the full purposes and objectives’ of the FLSA” and thus implicate federal preemption concerns.

As the court explained, because Zucchini Gold’s obligation to pay overtime arose only under the FLSA, the plaintiffs’ Wage Act claim for untimely overtime payments was entirely dependent on the FLSA violations—and “[i]n these circumstances, allowing the plaintiffs to pursue [W]age [A]ct remedies [i.e., automatic treble damages] for FLSA violations would amount to circumvention of the remedy prescribed by Congress,” which, as noted above, provides for “at most, double damages,” and (unlike the Wage Act) permits employers to avoid double damages “if they can establish … that they acted in good faith and upon a reasonable basis.” Accordingly, the SJC reversed the trial court’s damages award and remanded the case to the lower court for “a determination of the appropriate damages under the [f]ederal overtime law.”

In addition to contesting the trial court’s award of treble damages under the Wage Act, Zucchini Gold argued that the jury’s verdict regarding the amount of the plaintiffs’ damages was unsupported by sufficient evidence because it was based entirely on the plaintiffs’ testimony and records of the hours that they had worked and the wages that Zucchini Gold had paid them. The SJC rejected that argument, reasoning that an employer that has failed to comply with its legal obligation to maintain accurate records of wages and hours “‘cannot be heard to complain that the damages lack the exactness and precision of measurement that would be possible had [it] kept records’ in accordance with the [law].” Accordingly, the court held, the plaintiffs’ own testimony provided reasonable and sufficient grounds for the jury’s calculation and award of damages.

Key Takeaways

The SJC’s decision in Devaney substantially reduces the exposure risks for employers with workers in Massachusetts who are entitled to overtime wages under federal law, but not under Massachusetts law. Under prior law, as the trial court decision under review in Devaney showed, such employers could, if found to have violated federal overtime requirements, be held liable for automatic treble damages under the Massachusetts Wage Act. After Devaney, employees in such cases will be limited to double damages, and employers will have an opportunity (not available under the Wage Act) to avoid doubling by showing that they acted in good faith and upon a reasonable basis.

The decision also underscores the importance of keeping complete and accurate records of employee hours and wages. Failure to maintain such records may not only violate federal and state laws, it may also leave an employer without a ready means of countering its employees’ testimony and other evidence regarding the hours they worked, and—as the Devaney court held—without a valid objection to any lack of precision or inexactness in the employees’ evidence.