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Massachusetts Supreme Judicial Court Holds Accrued, Unused Sick Time Does Not Qualify As Wages Under The Wage Act

Posted: March 23, 2018/in News /by jlerman@coldspringdesign.com

In a decision released January 29, 2018, the Massachusetts Supreme Judicial Court held that payment for accrued, unused sick time does not count as wages under the Wage Act, G.L. c. 149, §§ 148, 150. The decision, Tze-Kit Mui v. Massachusetts Port Authority, SJC-12296, addressed an employee’s claim that his former employer violated the Wage Act by failing to timely pay him for his accrued but unused sick time upon his retirement.

In 2013, the Massachusetts Port Authority (“Massport”) initiated disciplinary proceedings against its employee, Mui. A week later, he applied for retirement. Shortly thereafter, Massport discharged Mui from employment, an act later overturned by an arbitrator. The arbitrator ruled that Massport could not terminate Mui’s employment because Mui had already retired. In accordance with their sick pay policy, Massport paid Mui a percentage of his accrued, unused sick time. However, due to the length of the grievance and arbitration proceedings, the payment was not made until more than one year after Mui’s effective retirement date.

Mui sued Massport under the Wage Act, which provides that “any employee leaving his employment shall be paid in full on the following regular pay day,” and that “any employee discharged from…employment shall be paid in full on the day of his discharge…the wages or salary earned by him.” G.L. c. 149, § 148. Mui claimed his accrued, unused sick time constituted “wages” within the meaning of the statute. He sought treble damages of approximately $140,000 (representing three times the amount Massport had paid him under their policy).

The court was therefore tasked with determining whether the Wage Act encompasses sick pay. Looking to the language of the statute, the court noted the absence of any reference to sick pay and declined to expand the meaning of “wages” to encompass sick pay where it is not expressly mentioned. The court has previously declined to expand the meaning of “wages” to include other types of compensation not expressly named in the statute, such as discretionary bonuses, tax-exempt deferred compensation, and severance pay. The court also distinguished sick time from vacation time, which is expressly mentioned in the statute as a form of “wages,” because sick time may be used only when an employee or family member is sick. Vacation time, on the other hand, may be used for any reason.

Finally, the court considered whether sick time paid out in the form of a “contingent bonus” counts as “wages.” Here, Massport’s sick time policy provided for departing employees to be paid a percentage of their accrued, unused sick time as long as certain conditions were met – employees had to have worked at Massport for at least two years and they could not have been terminated for just cause. The court noted that the only contingent compensation expressly mentioned in the Wage Act is commissions. Previously, the court has declined to expand the term “wages” to include other types of contingent compensation. The court concluded that sick time paid in the form of a “contingent bonus” does not constitute “wages” under the Act.

This case serves as a very important decision for public employers and employees regarding claims under the Wage Act for accrued, unused sick time. Should you have concerns about how this decision impacts you, we strongly advise that you contact us with your questions.

This update is provided for informational purposes only and should not be considered legal advice.

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