Authored by Daniel Klein
On January 25, 2011, the Massachusetts Supreme Judicial Court affirmed a decision by the Division of Administrative Law Appeals (DALA) upholding a citation by the Attorney General’s Office against Michael Camara and his company, ABC Disposal, Inc., a recycling and waste hauling company, for illegally deducting from employees’ wages, in violation of the Massachusetts Wage Act, M.G.L. c. 149, § 148. In making this decision, the SJC has validated the Attorney General’s strict interpretation of the state’s Wage Act, making it more difficult for employers to deduct from wages costs attributable to an employee’s fault or negligence, even where the employee has authorized the deduction.
The case arose from a claim that ABC was deducting from its drivers’ wages the costs of damage to company trucks in accordance with company policy that a worker found to be at fault in an accident with a company truck could either accept disciplinary action or agree to set off damages against his wages. At no time did a driver’s pay, net of setoffs for driver fault, fall below minimum wage standards.
Concluding that the Massachusetts Wage Act prohibits wage deductions associated with an employer’s unilateral determination of an employee’s fault and damages, the Attorney General’s Office decided that ABC’s policy violated the law, cited ABC and Camara, individually, for intentionally violating the Wage Act, and ordered them to pay restitution in the amount of $21,487.96 and a penalty of $9,410. The Attorney General interpreted the Wage Act as generally prohibiting an employer from deducting, or withholding payment of, any earned wages, even where the employer has obtained an employee’s assent by “special contract.” M.G.L. c. 149, § 148. In the Attorney General’s view, regardless of an employee’s agreement, there can be no deduction of wages unless the employer can demonstrate, in relation to that employee, the existence of a valid attachment, assignment or “setoff” as described in M.G.L. c. 149, § 150, a condition the Attorney General claimed that the ABC setoff policy did not meet. The SJC reiterated its interpretation of the term “valid set-off” as referring to circumstances where there exists “a clear and established debt owed to the employer by the employee.”
ABC and Camara appealed. The SJC agreed with the Attorney General that ABC’s policy of making a unilateral assessment of fault and the amount of damages, with no role for an independent decision maker and, apparently, not even an opportunity for an employee to challenge the result within the company, did not amount to “a clear and established debt owed to the employer by the employee.” The option afforded ABC’s employees to choose “voluntarily” to accept either wage deductions or discipline offered them, the SJC found, was unacceptable.