Court Holds that Massachusetts Wage Act Applies to Unreimbursed Travel Expenses But Does Not Apply to Comp Time
The Massachusetts Wage Act is a powerful statute. Employees who succeed on claims brought under the Wage Act are entitled to mandatory triple damages, attorneys’ fees, interest, and costs. In that sense, the Massachusetts Wage Act is one of the most pro-employee statutes in the country. As a result, employees often get creative in arguing that certain payments should be covered by the Massachusetts Wage Act. On March 2, 2020, in the case of Furtado v. Republic Parking System, LLC, a Massachusetts Court analyzed whether the Act applied to unreimbursed travel expenses and comp time. Read the full opinion here.
Republic Parking hired Mr. Furtado in 2017 to manage one of its parking structures. Republic agreed to pay Mr. Furtado an annual salary of $85,000, provide a monthly vehicle allowance of $600, and mileage reimbursement for all work-related travel. Republic also gave Mr. Furtado comp time (additional paid time off), rather than paying him for additional work beyond his normal duties and normal working hours. Mr. Furtado worked for Republic for two years. During that time, he drove tens of thousands of miles for Republic and accumulated considerable amounts of comp time. Republic eventually terminated Mr. Furtado and elected not to compensate him for his accrued comp time and only reimbursed him for some of his travel expenses. Mr. Furtado sued, arguing that Republic violated the Massachusetts Wage Act by not compensating him for his accrued comp time and by not reimbursing him for all of his travel expenses.
Does the Massachusetts Wage Act Apply To Comp Time?
Before discussing whether the Massachusetts Wage Act applies to comp time, let’s make something perfectly clear: comp time is illegal in Massachusetts as it relates to non-exempt employees. Massachusetts law requires employers to pay non-exempt employees overtime for all hours worked over 40 in a workweek. It does not say that you can provide those employees with additional time off in lieu of that payment. In short, employers violate the Massachusetts Wage Act when they provide non-exempt employees with comp time as opposed to paying them an overtime premium.
As to whether the Massachusetts Wage Act applied to comp time, the Court said no. The Court stated that the Wage Act makes clear that holiday pay, vacation pay, and commissions are covered because they are ‘wages,’ but does not otherwise define ‘wages.’ The Court noted that courts are reluctant to read the term ‘wages’ broadly because the Wage Act contains criminal penalties. As a result, the Court noted that the term ‘wages’ is generally limited to salary, hourly pay, holiday pay, vacation pay, and definitely determined commissions. Here, the Court felt the comp time was “more akin to a bonus or incentive” because the parties agreed that Mr. Furtado was required to work flexible hours. The Court did narrow its holding by stating its finding was limited to employees who are paid a salary for working flexible hours. In sum, according to at least one court, the Massachusetts Wage Act does not apply to comp time for employees paid a salary for flexible work.
Does the Massachusetts Wage Act Apply To Payments for Travel Expenses and Mileage Reimbursements?
As to whether the Massachusetts Wage Act applied to payments for travel expenses and mileage reimbursements, the Court said yes. The Massachusetts Wage Act requires employers to reimburse employees for travel expenses. 454 CMR § 27.04(4). In doing so, the Court relied on previous cases that held that the Wage Act prohibits employers from shifting the ordinary costs of doing business onto its employees, including travel expenses, because doing so essentially reduces an employee’s wages, something that the Wage Act prohibits. In sum, according to at least one court, the Massachusetts Wage Act does apply to payments for travel expenses / mileage.