Massachusetts: closed for business

States spend skitillions of dollars (a skitillion is one followed by a wad of zeroes, or ten to the wad) on catchy slogans and jingles to lure gullible businesses to open plants and offices there. If you're from Massachusetts and of a certain age (that is, you now enjoy your federal age-discrimination rights), you probably still suffer from that dreaded 1970s earworm, "Makin' It in Massachusetts." Oh, those clever double entendres!

Anyway, the Commonwealth can stop spending tax dollars on musical lures for businesses because they're leaving and they ain't coming back. Why?

Treble damages. (Not to be confused with "treble entendres.") ("Treble" is a slightly fancy way for lawyers to say "triple." As in, "Jacoby Ellsbury just trebled to the triangle at Fenway. He's wicked good.") (Hey, it's a Massachusetts-themed post, OK?)

Here's the 411: The Massachusetts legislature passed Senate Bill No. 1059 into law on April 14, making treble damages mandatory for an employer’s violation of the Commonwealth’s wage-and-hour laws. Employees bringing claims over the payment of wages, minimum wage, or overtime could win three times the actual damages they suffered — even when the violation is inadvertent. The law, which passed when Governor Deval Patrick declined to veto it, overturns a 2005 decision of the Supreme Judicial Court that limited treble damages to cases involving an employer’s “willful misconduct.”

Previously, the statute left it up to the judge to determine whether an employer had maliciously violated the wage law before awarding treble damages. This allowed the court to distinguish between employers who intentionally deprived workers of their earned wages and employers who stumbled over the confusing technicalities of the wage laws. In Wiedmann v. The Bradford Group, the Massachusetts high court confirmed that the law gave judges the discretion to award treble damages to willful offenders. It was this case that the legislature overturned with the amended statute.

The new legislation becomes effective on July 13, 2008, and will govern all cases filed thereafter. What is uncertain is whether the law will have retroactive effect over earlier cases. Language in the legislation says that it was intended to “clarify the existing law and to reiterate the original intention of the general court that triple damages are mandatory.” (Ironically, the old statute’s legislative history makes clear that this was not the “original intention.") This language will encourage plaintiffs’ attorneys to argue that the law should be applied retroactively. If this argument prevails, all pending wage claims — and perhaps even those that have not yet been filed — would be subject to mandatory treble damages. We expect there will be hard-fought litigation over this issue.

With the passage of this new law, Massachusetts becomes the first state in the nation to make treble damages mandatory in wage-and-hour cases. With wage claims and class-action lawsuits already on the rise, Massachusetts now becomes the jurisdiction of choice for plaintiffs. (At least someone will be makin' it in Massachusetts.) Employers must be more careful than ever to ensure that they are complying with the Commonwealth’s wage laws.

What employers can do

• Pay your employees on time — especially when they depart.
• Make sure they’re properly classified as exempt or nonexempt.
• Have your employment counsel audit your pay practices.

In the meantime, Go Sox!

[Shout out to Steve Reed for his spot-on legal analysis.]