The Massachusetts Wage Act: What Every Employer Needs to Know About Paying Employees

The Massachusetts Wage Act: What Every Employer Needs to Know About Paying Employees

By a Massachusetts Business Attorney · Employment Law

I didn’t realize that late payment of a commission could expose me personally to triple damages. That’s what a client said after we discussed the Massachusetts Wage Act. And he’s right to be concerned. The Wage Act is one of the most employer-unfriendly statutes in Massachusetts, and violations can cost you far more than the wages you tried to save.

When Wages Must Be Paid

Let me start with the basic rule. Under M.G.L. c. 149, § 148, hourly employees must be paid weekly or bi-weekly, within six days after the end of the pay period (seven days if they work a seven-day week). Salaried exempt employees may be paid bi-weekly or semi-monthly, and monthly only if the employee chooses that.

Here’s what it means in practice:

Frequency. Hourly employees must be paid weekly or bi-weekly. Salaried exempt employees may be paid semi-monthly, but monthly pay is allowed only if the employee chooses it. You also cannot hold back a week’s pay as a “cushion” or to avoid a glitch in your payroll system.

On time. “Payday” means the employee must receive the wages on the scheduled day. If you say payday is Friday and you don’t pay until the following Monday, you’ve violated the law. If you mail checks and they arrive late, that’s your problem, not the employee’s.

In full. All wages earned must be paid. Earned means wages the employee has already worked. You cannot hold back pay as a form of discipline or incentive.

Upon termination. This is where I see employers get into trouble. When you fire or lay off an employee, all earned wages, including accrued vacation and commissions that are already due, must be paid in full on the last day of work. You cannot make a fired or laid-off employee wait until the next scheduled pay period. When an employee quits, final wages are due no later than the next regular payday.

The statute says “wages shall be paid in full.” Courts interpret this strictly. If you owe $10,000 in final wages and you pay $9,900, you’ve violated the law.

What Counts as Wages

Here’s something I see employers get wrong all the time: they think “wages” means only the base hourly or salaried rate. The Wage Act is much broader.

Wages include:

1. Base compensation. Hourly rate or salary.
2. Overtime. All overtime pay required by law.
3. Commissions. Commissions are wages once the amount is definitely determined and due under your commission plan. If the plan says a commission is earned when the customer pays, that condition is generally enforceable. Once a commission is earned under the plan, you cannot withhold it because the employee left or because you changed your mind.
4. Bonuses. Massachusetts courts have generally held that discretionary bonuses, and bonuses that depend on staying employed through a date, are not “wages” under the Wage Act. But a bonus you have promised and the employee has fully earned can still be enforced as a contract. Write your bonus terms carefully.
5. Piece-rate pay. Payment based on units produced.
6. Shift differentials. Extra pay for night shifts or weekend work.
7. Accrued vacation. If your policy or employment contract promises vacation, accrued vacation is a wage. If an employee accrues 20 days of vacation and leaves, you must pay those out.
8. Paid time off. PTO policies are subject to the Wage Act once accrued.

Wages do NOT include:

• Tips (though they have their own laws).
• Stock options (usually, unless there’s a specific agreement).
• Loans or advances (unless they’re forgiven, at which point they become wages).

The critical point: if you promised it, and the employee earned it, it’s a wage. The form doesn’t matter. Written, verbal, in a handbook, in a contract, implied by custom in your industry. If an employee reasonably understood they were earning something, you probably have to pay it.

Permissible and Impermissible Deductions

Now let’s talk about deductions, because this is where violations happen.

What you CANNOT deduct:
– Uniforms, equipment, or tools required for the job (unless the employee keeps them).
– Cash shortages, missing inventory, or customer refunds (you cannot shift business losses to employees).
– Damage to company property, no matter how it happened. If you believe an employee owes you for damage, that is a separate claim. It cannot come out of the paycheck.
– Loan repayment (unless there’s a separate, clear loan agreement).
– Anything that brings the employee below minimum wage.

What you CAN deduct:
– Federal and state income taxes (required).
– Social Security and Medicare taxes (required).
– Court-ordered child support, garnishments, and wage assignments.
– Voluntary deductions the employee authorizes in writing for his or her own benefit, such as health insurance premiums, retirement contributions, or union dues.
– Health insurance premiums, retirement plan contributions (if authorized and compliant with ERISA).

Here’s the trap: even if an employee agrees to a deduction, you cannot violate the statute. Deductions for cash shortages, breakage or other business losses are not allowed, even with the employee’s signed agreement, and it does not matter whether the employee would still earn minimum wage. You also cannot require an employee to reimburse you for business losses as a condition of employment.

One scenario I see: an employee breaks something, and the employer wants to recoup the cost from the final paycheck. Illegal. You have to let that one go, or sue the employee separately (which is rarely worth it).

Another scenario: an employee leaves without giving two weeks notice, and the employer withholds pay to penalize them. Illegal. All earned wages must be paid regardless of notice, conduct, or reasons for leaving.

Treble Damages and Personal Liability

Here’s where the real danger lies. Violating the Massachusetts Wage Act doesn’t just cost you the unpaid wages. It can cost you three times that amount.

Under the statute, if an employer violates the Wage Act, the employee can sue for:

1. All unpaid wages (the actual amount owed).
2. Interest on those wages from the date they were due.
3. Treble damages (three times the unpaid wages in total, as liquidated damages).
4. Attorney fees and court costs (the employee’s attorney gets paid by the employer).

So a $5,000 wage violation becomes a $15,000 liability, plus interest, plus attorney fees. That can easily exceed $20,000. And if there are multiple employees, multiply it by however many people are affected.

Here is the part that surprises people: the employee does not have to prove you acted willfully or in bad faith. Since 2008, treble damages are mandatory for any Wage Act violation. An honest payroll mistake or a final check paid a few days late can trigger the same triple damages as a deliberate refusal to pay.

Here’s something that shocks employers: corporate officers and managers can be held personally liable for Wage Act violations. This is not a corporate liability you can hide behind. If you’re an owner, officer, or manager in control of wage payments, and the company violates the Wage Act, you can be sued personally. Your personal assets are at risk.

This personal liability provision has turned wage disputes into personal liability cases. A business owner who thought they were protected by corporate liability suddenly finds themselves personally sued.

Common Wage Act Mistakes

Let me walk you through the scenarios I see most often:

Delayed final paychecks. An employee is terminated. You need time to process the final check, so you hold it until the next pay period. Violation. That check must be issued immediately upon termination.

Unpaid commissions. An employee leaves the company, and you withhold earned commissions because “they didn’t finish the deal.” If they earned the commission under your agreement, you must pay it. The deal closing is not a condition of payment once the work is done.

Bonuses tied to impossible conditions. You promise a bonus if the employee achieves a goal, but the goal changes or is taken away. If the employee fully earned a promised bonus, you may still owe it as a matter of contract, even if it is not a “wage” under the Wage Act.

Accrued vacation not paid. An employee leaves with 15 days of unused vacation. You don’t pay it because “vacation use is mandatory annually.” Too bad. Accrued vacation is a wage in Massachusetts.

Retroactive policy changes. You change your payday from weekly to biweekly, and employees miss a pay period. You must honor the original schedule until you give proper notice.

Deductions for uniforms or equipment. You require employees to buy or maintain uniforms and deduct the cost from pay. Illegal. You must provide required equipment.

The Bottom Line

The Massachusetts Wage Act is plaintiff-friendly and employer-unfriendly. Massachusetts courts and the Attorney General take wage violations seriously. If you’re not paying on time, paying in full, and honoring what you’ve promised, you’re exposed.

I tell all of my business clients to review their payroll practices right now:
Are you paying on a regular schedule? Are you paying in full? Are you withholding anything you shouldn’t be? Are your commissions and bonuses being paid as promised? On termination, are you paying final wages immediately?

If the answer to any of these is no, fix it. The cost of correcting a practice is far less than the cost of defending a wage claim or paying treble damages.

For more on employment obligations, check out our guides on employment contracts and wrongful termination.

Call my office at 978-273-8337 or visit gaudetlawoffice.com to review your payroll practices and wage compliance.

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ABOUT THIS ARTICLE

This article was prepared by a Massachusetts attorney and is provided solely for general informational and educational purposes directed to members of the general public. It does not constitute legal advice and does not create an attorney-client relationship. The law applicable to any particular situation depends on the specific facts and circumstances of that matter. Readers are encouraged to seek the advice of a licensed Massachusetts attorney before taking any action.

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