In July of 2015, Massachusetts became one of the few states to require employers to provide sick leave to their employees. Most employers, by now, are aware of this new law, including that if they have 11 or more employees, the sick leave must be paid. Many things, however, have remained unclear regarding the Earned Sick Time Law, including whether employers must compensate employees for unused sick time upon termination, like they must do with unused vacation time.

Earlier this year, the Supreme Judicial Court (SJC), in the case of Mui v. Massachusetts Port Authority, was asked to determine whether unused sick time was akin to unused vacation time under Massachusetts law. In Mui, plaintiff Tze-Kit Mui applied for retirement after Massport initiated disciplinary proceedings against him. Shortly thereafter, Massport fired him for cause. Under Massport’s written sick leave policy, employees who are discharged for cause are not eligible to be paid for any of their accrued unused sick time. Massport, in reliance upon that policy, did not compensate Mui for his unused sick time at the time of termination.

Mui challenged the termination on the grounds that it was without cause. An arbitrator agreed with Mr. Mui, which, meant, according to company policy, that he should have been paid for his unused sick time at the time of termination. Mui filed suit under the Massachusetts Wage Act as more than a year had already passed since he had retired. In that suit, Mui claimed triple damages, attorneys’ fees, interest, and costs.

The Superior Court initially agreed with Mui and held that his employer had violated the Massachusetts Wage Act by not paying him his unused sick time at the time of termination. After Massport appealed, the SJC transferred the case to itself sua sponte, holding that the legislature did not intend to include sick pay within the definition of “wages” in enacting the Wage Act. “Sick time,” the SJC observed, is different from vacation time, which the Wage Act does require employers to pay upon an employee’s separation:

Unlike vacation time, which can be used for time away from work for any reason, sick time is to be used only when the employee or a family member is ill. See G. L. c. 149, § 148C (a) (defining sick time). Thus, because its usage is conditional, i.e., employees do not have an absolute right to spend down their sick time, employees are not typically compensated for accrued, unused sick time.

The SJC noted that although an employee may use accrued sick time under the appropriate circumstances, such time may be considered “lost” if it isn’t used. Such “use it or lose it” policies are common in the workplace: “Because accrued, unused sick time is not compensable under a ‘use it or lose it’ sick time policy, such time clearly is not a wage under the act.”

Takeaways

Unused sick time is not wages under the Massachusetts Wage Act. As a result, employers do not have to compensate employees for unused sick time at the time of termination. Employers should be sure their employment policies, including handbooks, are up to date in order to be sure they are able to properly rely on this helpful decision from the Massachusetts Supreme Judicial Court. Questions? Contact us today with questions about the Massachusetts Earned Sick Time Law.