Massachusetts – High Court Clarifies Wage Law
There’s some recent good news for employees from the state’s highest court. The Massachusetts Supreme Judicial Court has clarified that employers may not reduce employees’ wages by charging the employees for the company’s insurance premiums, “franchise fees,” and the like. The case, Awuah, et al. v. Coverall North American, Inc., involved an employer that had improperly categorized its janitorial employees as “independent contractors,” then charged them for the company’s workers’ compensation insurance, janitorial bonding costs, and liability insurance. The company also charged the employees “franchise fees,” and withheld their pay until the customers (who used the janitorial services) had paid their bills.
The Supreme Judicial Court declared that all these practices violate the Massachusetts Wage Act. Even though the employees in question had agreed to Coverall’s “franchise fee” repayment arrangement, the SJC explained that these comprise illegal “special contracts,” and violate public policy.
This case comes on the heels of another important SJC case under the Massachusetts Wage Act, Camara v. Attorney General, where the Court voided an employer’s practice of reducing trucking employees’ wages by deducting the cost of damage to company property that the employer determined was caused by the employee. In that earlier case, the Court declared such deductions unfair, where the employer served as prosecutor, judge and jury, and the employee had no chance to demonstrate to an independent judge that he was not to blame for damage to the truck.
This pair of cases makes clear that employers may not legally shift the burden of a variety of company expenses to employees, even if the employers have forced their employees to sign away their rights as a condition of employment. Massachusetts courts will not tolerate employers using subterfuges like “independent contractor” or “franchise” arrangements to avoid their responsibilities.
Watch this space for news of other important legal developments in the employment arena.