On April 4, 2022, the Massachusetts Supreme Judicial Court ruled in Reuter v. The City of Methuen that discharged employees must be paid all wages due to the employee including accrued unused vacation time or the employer is liable for treble damages.
Mass. Gen. L. Ch. 149 § 148 stipulates that terminated employees must be paid in full on the day of discharge, while employees who resign may be paid on the following regular pay day. Under previous rulings by Massachusetts courts, when an employer paid final wages untimely to a terminated employee but paid those wages in full, the employer was only liable for interest accrued between the date of termination and the date of payment.
In Reuter v. The City of Methuen, the Massachusetts Supreme Judicial Court overturned that precedent, awarding a terminated employee treble damages for the late payment of her accrued unused vacation time. This case expands the employer's liability to pay all wages including accrued unused vacation time in full or face triple penalties if a complaint is filed.
Employers in Massachusetts should ensure that they pay involuntarily terminated employees all wages due, including accrued unused vacation day on the date the employee is terminated.
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