The Massachusetts Wage Act:
Not Only For Those In Massachusetts

By Peter Moser, Sarah Ruter   June 2, 2023

As Massachusetts employers are well aware, the Massachusetts Wage Act, M.G.L. ch. 149 § 148, has some teeth. In 2022, the Reuter v. City of Methuen decision held that in no uncertain terms, Massachusetts employers are on the hook for treble damages for either intentional or unintentional violations of the Wage Act.

The Wilson v. Recorded Future Case

Until now, the general assumption was that the Massachusetts Wage Act was something that only employers of Massachusetts employees needed to care about (although certain sets of circumstances in which employees out of state had a “significant relationship” through their work to the Commonwealth merited relief under Massachusetts law). A federal district court sitting in Massachusetts has now determined that even when an employee lives and works out of state, that employee may in some circumstances still be able to seek relief under the Massachusetts Wage Act.

In Wilson v. Recorded Future, Inc., et al., Civil Action No. 1:22-cv-11105-IT (April 19, 2023), the employee, Wilson lived in Virginia, not Massachusetts. Wilson argued that because employer Recorded Future had its headquarters in Massachusetts and because significant decisions relating to his employment (compensation plans, commission payments, hiring, and termination) were made in those headquarters, he should be considered a Massachusetts employee. He also alleged that he had significant contacts with Massachusetts because he communicated with people at the company headquarters and because from time to time he had to travel to Boston for work.

Recorded Future disputed the notion that Massachusetts had the “most significant relationship” to Wilson as an employee, namely because Wilson was not a resident of Massachusetts and did not work there, none of his employment documents (such as his offer letter or compensation plan) included a Massachusetts choice of law provision, neither of his supervisors worked in Massachusetts, and he did not actually work with or hold himself out to customers representing that he worked with customers in Massachusetts. The court agreed with Wilson and denied Recorded Future’s motion to dismiss the case, finding that it could well be that Wilson had the “most significant connection to the employment relationship” in Massachusetts.

What Does This Mean?

While the Wilson decision does not necessarily mean that anyone on earth can make a valid claim under the Massachusetts Wage Act, it does mean that factors employers previously assumed were dispositive (e.g., the fact that the employee does not live or work in Massachusetts) will not necessarily carry the day. The “significant relationship” fact inquiry may lead to increasingly attenuated “connections” between Massachusetts and out of state employees being held valid. Ultimately, this could lead to a rash of wage claims from “extraterritorial” employees seeking to benefit from Massachusetts’ strong protections and significantly pro-employee enforcement of wage claims.

What Should We Do Now

The easiest way to avoid any Wage Act violations is, of course, to ensure that your business is doing payroll properly and that your employee handbook has a provision in place for employees to ask questions about or dispute what they see as compensation errors. From a risk management perspective, recognizing that any potential connections your business has with Massachusetts could lead to a valid Massachusetts Wage Act claim is key. Even if your business is incorporated in Delaware, headquartered in New Hampshire, and comprised of remote employees in various other states, connections that seem too attenuated for enforcement may well be seen by today’s courts to be “close enough.” There is no “bright line” rule or flow chart that will lead to a clear and direct answer. Ultimately, if you have a headquarters in Massachusetts even though 90% of your workforce is out-of-state and remote, your business may be on the hook for Massachusetts Wage Act violations.

Employers who are not sure of whether their out-of-state employees may successfully bring Wage Act claims in Massachusetts should reach out to consult with your employment counsel to evaluate potential risks. Handbook provisions and employment documents could clearly spell out choice of law preferences and could also potentially safeguard against potential Massachusetts Wage Act claims.

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