Employer’s Deductions Of Earned Wages Deemed Unlawful By The Supreme Judicial Court

Employee rights advocates experienced a notable victory under the Massachusetts Wage Act to start off the new year. In Camara v. Attorney General, the employer, ABC Disposal Service, provides curbside collection and disposal services. It instituted a policy whereby drivers determined to be at fault for accidents are provided with the option to either receive a disciplinary warning or to set off the damage allegedly caused against wages earned. The determination as to whether the driver is at fault is made by the company internally. The employee has no right to appeal the determination. Pursuant to this policy, over less than a two year period, the company deducted over $20,000 from the paychecks of 27 different employees. The question before the Supreme Judicial Court was whether this policy violated the Wage Act.

In finding that this policy, in fact, violated the Wage Act, the SJC noted that Section 148 of the Wage Act prohibits employers from entering into “special contracts” with employees that relieve the employer of the legal duty to pay wages earned:

No person shall by a special contract with an employee or by any other means exempt himself from this section or from section one hundred and fifty.

This particular clause of the Wage Act recognizes the unequal bargaining power between employer and employees. Often times, employers require employees to sign numerous forms of paperwork at the outset of employment without questioning the content. Preventing employers from leveraging their superior bargaining position to require employees to agree to a policy that avoids the full payment of wages is a paramount concern.

Notably, in reaching its decision, the SJC rejected the employer’s argument that the wages ABC Disposal deducted from its employees constituted a “valid set-off” pursuant to Section 150 of the Wage Act:

An arrangement whereby ABC serves as the sole arbiter, making a unilateral assessment of liability as well as amount of damages with no role for an independent decision maker, much less a court, and, apparently, not even an opportunity for an employee to challenge the result within the company, does not amount to “a clear and established debt owed to the employer by the employee.”

The Massachusetts Office of the Attorney General, which originally ordered restitution and imposed a civil penalty of $9,410, issued a press release praising the decision, in which Attorney General, Martha Coakley, stated:

Today’s decision is an enormous victory in our office’s efforts to protect workers and their hard earned wages from unfair business practices. The employer in this case shifted costs of doing business onto its workers who were forced to choose between giving up their wages or suffering uncertain discipline.

Overall, employees should be vigilant about wage deductions. As the Camara decision illustrates, only in limited circumstances will an employer have the discretion to withhold earned wages.