CLIENT ALERT: Titles Matter

Client Alert

By: John Perten

Under the Massachusetts Wage Act, employers are liable for up to treble damages for failing to pay wages.  Regardless of corporate status, the “president, treasurer … and any officers or agents having management of such corporation” are deemed employers under the statute and therefore personally liable.  In Lynch v. Crawford, the MA SJC was asked to determine whether the chairman of the board for a non-profit corporation, a volunteer position, could be deemed an employer for purposes of liability under the Wage Act.  The chairman argued that as a volunteer of a non-profit he was immune from suit due to the State charitable immunity statute and the Federal Volunteer Protection Act.  While agreeing that ordinarily a volunteer chairman would be immune from suit, the Court denied summary judgment (meaning the case was allowed to proceed) because the chairman routinely signed corporate documents as “president,” and the president was presumptively liable.  Moreover, there was a question of fact as to whether the chairman purposely misrepresented that employees would be paid while knowing that there was no money to pay them which, if so, would remove any qualified immunity that might otherwise inure.

Moral of the story:  titles matter and, at least when it comes to wages, be very careful what you say to employees regarding the ability to pay wages.  Moreover, this is a stark reminder that the liability shield that often drives the decision to become a corporation does not protect corporate officers and management from personal liability for violations of the Wage Act.

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John Perten is a shareholder at Sheehan Phinney Bass & Green.

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.