I am a manager at a company and I am seeking advice for myself and my team as to how to handle the lack of paychecks we have received. I work for a company that has not issued paychecks for the last 2 completed pay periods (meaning at least one check is over a month late at this point). We are currently working in the midst of the 3rd pay period for which the company may or may not be able to pay us.
I am quite familiar with the Massachusetts Wage Act and the court findings about deferring payment. I will point out that no one has voluntarily deferred payment anyway. I know it is within everyone's rights to file a wage claim with the Attorney General and pursue the treble damages. That is the long term plan if you will. However, I have an immediate problem I do not know how to advise people. The company is not laying anyone off. Members of my team are asking me if I expect them to work given that they are not getting paid. My boss is certainly asking me to do things, specifically related to generating revenue to deal the payroll problem. I am at a loss for what to tell my team. I certainly don't want to ask them to do work, but I have also said, be careful not to give the company grounds for firing such as not doing one's job.
Has my company discovered a loophole whereby it can make people work even though it doesn't have the cash to pay them. Most of the precedents I could find deal with people who are no longer at the company at the time they even file the wage claim. Most companies would do layoffs at this point. People do not want to quit because they feel they forfeit UI. I believe the management really does not want to lay people off because it would first, force the timeframe of the possible treble damages even more since they wouldn't even have the 6/7 day grace period for each check (only one check so far is in the treble damages category). #2 I believe they have some issue with UI, as I was told "Thanks that's great news" when one of my team quit because I reduced his hours. Does not getting paid constitute "Constructive Discharge"? Can my people file for unemployment even though they have not technically been laid off or do they have to quit? Asking for a layoff does not seem like an option because then the company can claim voluntary layoff to try to deny the UI claim.
Submitted by Anonymous on Wed, 11/17/2010 - 16:20
No Pay = No Work
Your company can take any posture it wants with unemployment issues, but the bottom line is that its employees will almost certainly get benefits if they leave the job because they are not paid their earned wages. Whether you term the end of employment "constructive discharge" or outright firing, the fact is that Massachusetts employees cannot be forced to show up on the job without pay under threat of losing unemployment benefits. In the final analysis, people work to get paid. If their promised wages are an illusion, the basis of their employment agreement is too, and they cannot be said to have quit their supposed jobs.
Having said this, I'm a bit unclear on your role in what appears to be a substantial mess at your company. The employees who work for you should make decisions on unemployment applications for themselves lest you be on the hook for any errors of judgment. In addition, your reference to your "team" raises the question as to your role as a manager for the employer. You should be mindful that, to the extent you ask your workers to perform duties, you may be representing to them that they'll be paid for their work. By passing along your own boss's instructions or promises, after all, you are inducing the workers to hang around and work under at least an implied promise that your company will keep its word and pay them. Doing this can result in personal problems for you regardless of your intentions.
The potential issue here derives from the Massachusetts Wage Act. Your general description is accurate as far as it goes -- workers must be paid for the work they perform within limited time frames, and any failure to pay wages can lead to triple damages and legal fee awards to workers. You omit, however, the provision of the statute that impose personal liability on managers involved in non-payment decisions. If you instruct your workers to stay on the job and the company does not pay them, the triple damages claims you refer to may name you as a defendant. You will be wise to consider this and get legal advice of your own before giving any further work instructions to your team.
Jack K. Merrill, Esq.
No on UI from the DUA; is class action an option?
An update and an appeal:
One of my directs just tried filing for unemployment yesterday and was also turned away by the DUA rep saying he had not been separated from work. The guy had lots of questions, like the obvious one which is why doesn't the CEO just do layoffs. He advised quitting and hoping that the hearing would go in my employee's favor. But he offered no encouragement that would be the outcome, plus there is a very large time lag. In this unemployment rate climate that just sounds crazy. So just before the holiday season we have to assume all the risk by quitting. Needless to say everyone feels pretty trapped.
Does anyone have a recommendation for a way out of this where the people not being paid, don't have to assume all the risk, on their mortgages, health care, and even having Christmas at this point? This seems to be quite a loophole that the company has found. Whereby everyone is working for their pay, rather than being paid for their work.
I am about to take the hit, and insist on the layoffs with the CEO. Which will mean that ultimately I will not be able to claim unemployment, but at least it would free up the rest of my team.
We are discussing pooling our resources to try and obtain legal counsel as a group. Can anyone advise whether this would qualify as a 'class action' or some other means by where our total collective damages would be enough incentive for counsel to take the case, and some sort of collective retainer.
I haven't had much luck getting employment lawyers to return my calls, I assume because of the time of year.
Thanks for guidance.
Thanks for your advice it is really appreciated. It does seem like everyone must just suck it up and deal with the long term resolution through possibly fighting the company about UI and pursuing the wage claim.
It is quite a mess. And I am sure it is worse than even this aspect. I am not sure if this is legal in MA but, I do believe that the company is paying its invoices ahead of paying the employees as well. I believe that is unlawful but I haven't been able to zero in on that statute through searching the web.
I particularly appreciate the personal guidance. It is definitely something I will take seriously, although at this point a retainer is a bit much for me given the lack of income. I have not asked anyone to do work at this point, and have said both to my direct reports and my manager "I will not ask anyone to do work when they are not getting paid". That of course does not stop my boss from circumventing and asking my team directly, and then when they come to me and say "what do we do?", I have been befuddled, and hence posting here.
I have passed along that advice about an act that might be grounds for claiming we were not doing your job, not from my managers, but from the DUA rep I spoke with when I attempted to file for UI myself. He rejected me and said I could not because I still had a job. When I put to him the same question I stated here, that was essentially his answer, "If you or your team stop working they can claim you quit, or have justification for firing you" and he pointed me in the direction of the AG and the wage claim.
At the time I had not encountered the concept of Constructive Discharge. So I was trying to pose the question here, in light of the fact that this is still going on.
Thanks again,
-S.