Massachusetts SJC holds that Wage Act does not preempt common law and equitable claims for unpaid wages

The Massachusetts Supreme Judicial Court (SJC) has overruled a Superior Court decision holding that a state statute requiring payment of wages preempts common law and equitable causes of action for recovery of unpaid wages. As a result of the decision in Lipsitt v. Plaud, No. SJC 11285 (Aug. 12, 2013), employees will be able to recover wages that have been unpaid for longer than the statute’s three-year limitations period—a common law breach of contract claim, for example, has a six-year limitations period under Massachusetts law. Such wages would not be subject to mandatory trebling under the statute, however, and the employee would not automatically recover his or her attorneys’ fees (as the statute also requires).

Cyrus Lipsitt worked for the FranklinD.RooseveltAmericanHeritageCenter and Joseph Plaud, the Center’s president, from 2004 until 2007. During that period, according to Lipsitt’s complaint, the Center and Plaud failed to pay him approximately $127,000 in salary owed under his employment contract with the Center. In September 2010, Lipsitt filed suit in the Superior Court, seeking recovery of the unpaid wages and asserting claims for breach of contract, quantum meruit, and violations of the Massachusetts Wage Act, Mass. G.L. c. 149, §§ 148, 150. In connection with his Wage Act claim, furthermore, Lipsitt sought treble damages and attorneys’ fees, both of which are mandatory under the Act.

The Center and Plaud filed a motion to dismiss the complaint, arguing (among other things) that Lipsitt’s breach of contract and quantum meruit claims for recovery of his unpaid wages were preempted by the Wage Act. The Superior Court agreed, holding that “[i]n enacting the Wage Act, the legislature created a comprehensive vehicle for recovering unpaid wages,” and thus that it had intended to preempt common law and equitable claims for the recovery of wages, such as those that Lipsitt had asserted in his complaint. Because most of Lipsitt’s allegedly unpaid wages had accrued before September 2007—i.e., more than three years before he had filed his lawsuit, and thus outside of the Wage Act’s three-year limitations period—the effect of the Superior Court’s decision on Lipsitt’s prospective recovery was substantial.

Lipsitt filed an appeal from the Superior Court’s decision, and the SJC reversed it. After examining the language and history of the Wage Act, the court found no indication of legislative intent to preempt common law claims. It also found no basis for holding that the Act preempted common law claims by “necessary implication,” because the legislature, when it enacted the statute, did not “create[] a new right or duty that is wholly the creature of statute [and] does not exist at common law”—whereas such a right or duty is a common feature of other statutes held to have preempted common law claims by necessary implication. Thus, the court concluded, the Wage Act does not preempt common law and equitable claims for recovery of unpaid wages, and Lipsitt may seek recovery of his pre-September 2007 wages on the basis of such claims. As the court recognized, however, Lipsitt will not have the benefit of the Wage Act’s automatic treble damages and attorneys’ fee award provisions with respect to such wages.

Originally posted on lexology.com, August 16, 2013, by Patrick M. Curran

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