Massachusetts Law Requires Payment of Wages on Day of Termination…But When Does a Termination Become Effective?

We’ve written before about how, in termination situations, employers must pay employees their final wages and unused vacation time on their last day of employment. The specific statutory language provides as follows:

“any employee discharged from . . . employment shall be paid in full on the day of his discharge. . . .” M.G.L. ch. 149 § 148.

A Massachusetts court recently provided guidance as to what the day of ‘discharge’ is in situations where an employer gives an employee advance notice that their employment is ending.

Under Massachusetts law what is considered the date of termination for purposes of receiving your final pay including unused vacation pay?

Scott Knous worked for Broadridge Financial Solutions, Inc. as an at-will employee. Mr. Knous, like most employees, accrued vacation time as part of his employment. On May 17, 2019, Broadridge told Mr. Knous that it was ending his employment and that he was being terminated. Broadridge told Mr. Knous that he would be paid through May 24 and that he was to use the period of May 17 – May 24 to return company property and gather his personal belongings. Broadridge instructed Mr. Knous to cease performing work on its behalf as of May 17.

Broadridge did not pay Mr. Knous his accrued vacation time or final wages on May 17. Instead, Broadridge paid those wages on May 24, but not before Mr. Knous filed suit, arguing that Broadridge violated the Massachusetts Wage Act by not paying him his wages on his day of discharge, which Mr. Knous argued was May 17. Broadridge disagreed, arguing that his day of discharge was May 24.

The Court agreed with Broadridge stating that May 17 was the ‘notice of discharge,’ whereas May 24 was the ‘actual discharge.’ The Court stressed that Mr. Knous may not have performed services between May 17 – May 24, but he remained on Broadridge’s payroll and continued to receive company benefits. The Court rejected Mr. Knous’s argument that the ‘discharge’ happened when he was told to stop doing work (May 17).

This decision has real-world application. In our experience, employers frequently give employees notice of a pending termination, something they don’t have to do and something, in our opinion, they certainly should not be punished for doing so. While we appreciate the clever lawyering over the meaning of ‘discharge,’ we think the Court got this one right.

If you have questions regarding payment of wages in Massachusetts, call our office today for a free consultation.