A Win For MA Employers, Sick Pay Does Not Constitute Wages

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Q. I have employees in Massachusetts.  Do I need to pay for accrued sick leave upon termination?

A.  In a recent opinion, the Massachusetts Supreme Judicial Court followed the lead of most other jurisdictions in finding that sick pay does not constitute wages under the Massachusetts Payment of Wages Law.  Unlike accrued and unused vacation, which is considered to be wages and must be paid at termination, Massachusetts employers are not required by statute to pay out accrued but unused sick pay to employees upon termination of employment.

Although the Massachusetts statute does not explicitly exclude sick pay from the definition of wages, the Court reasoned that “employees do not have an absolute right to spend down their sick time,” it must be used only when the employee or a family member is sick.  Further, the Court noted that it is not customary for employees to be compensated for accrued but unused sick time, and it is common for employers to have a “use it or lose it” policy regarding sick leave.  Accordingly, the Court limited the definition of “wages” under the Massachusetts Payment of Wages Law to include only hourly and salaried pay, accrued and unused vacation time, and certain commissions that have become due and payable to the employee.

Despite this win for Massachusetts employers, companies should continue to remain vigilant about compliance with the Wage Payment statute upon an employee’s termination.  An employer that fails to comply with the statute may be liable for mandatory awards of treble damages and attorneys’ fees.  In particular, keep in mind that employees who are terminated must be in paid in full on the day of discharge and those who resign must be paid in full by the next regular pay day.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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