Unused Sick Time Not “Wages” Under Massachusetts Law

CLIENT ALERT

by

Mark J. Ventola and Paul S. Lopez


On January 29, 2018, the Massachusetts Supreme Judicial Court (“SJC”) ruled that accrued but unused sick time does not constitute “wages” under the Massachusetts Wage Act (the “Wage Act”). With this broad ruling, employers may safely conclude that they are not required to pay employees for accrued but unused sick time upon separation from employment, absent a policy or agreement to the contrary.

The Wage Act provides that an employee who resigns must be paid in full for all wages due on the next scheduled pay day. Many employers are unaware that an employee who is discharged must be paid in full for all wages due on the day of discharge. Another potential pitfall for employers is that the Wage Act does not define “wages” directly, saying only that the term “shall include any holiday or vacation payments due an employee under an oral or written agreement” (emphasis added). Other forms of compensation that may be “included” within the definition of “wages” have been the subject of a number of disputes and resulting court decisions. While sick pay is not mentioned in the Wage Act, it is also not explicitly excluded from the definition of “wages,” thus leaving the question open until recently.

The SJC answered the open question about sick pay last month, in Tze-Kit Mui v. Massachusetts Port Authority. This case arose when the employee claimed that Massport violated the Wage Act when it failed to pay him for accrued but unused sick time in the same manner as wages. The SJC was thus tasked with determining whether accrued but unused sick time should be treated as “wages” that must be paid at termination in accordance with the Wage Act.

Because the Wage Act does not mention sick pay, and because it does not include a full definition of “wages,” the SJC was called upon to decide whether the legislature intended to include sick pay in the definition of “wages.” Comparing sick time to vacation time, the SJC noted that while both typically accrue as one works for an employer, vacation time may be used for any reason, whereas sick time is only used if someone is sick. Because the ability to use sick time is conditional upon being sick, the Court reasoned that it may be “lost” if not used. The SJC found that difference to be determinative, noting that other forms of contingent compensation are not included in the definition of “wages.”

For employers, it is now clear that accrued but unused sick time need not be paid to an employee at separation, absent a policy or agreement that provides otherwise. In light of this decision, all Massachusetts employers should revisit their sick leave policies to confirm that they accurately reflect their company’s desired practice, with the understanding that they are not required to provide payment for accrued but unused sick time upon separation.

If an employer has any questions, our Labor & Employment attorneys are available.

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Mark J. Ventola and Paul S. Lopez are attorneys at Sheehan Phinney Bass & Green.  Mark co-chairs the firm’s Labor, Employment and Employee Benefits Group.

This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.