Rejecting a legal theory widely accepted in many jurisdictions, namely that statutory wage-and-hour laws are intended to preempt claims for alleged unpaid compensation brought pursuant to older, less-specific common law theories, the Massachusetts Supreme Court ruled last month that an employee whose wage claims may well be time barred under the Massachusetts Wage Act can seek to recover such wages through common law claims. Lipsitt v. Plaud, 2013 Mass. LEXIS 694 (Mass. Aug. 12, 2013).
In Plaud, the museum director plaintiff brought suit to recover salary arrearages under the Wage Act, as well as under breach of contract and quantum meruit (quasi-contract) theories. Acknowledging that the claims under the Wage Act’s three-year limitations period likely were time-barred, Plaintiff withdrew those claims and appealed the district court’s ruling that his contractual claims were preempted. The Supreme Court, required to determine whether the “necessary implication” of the enactment of the Wage Act was preemption of common law rights, observed that the continued availability of common law remedies did not frustrate or negatively impact enforcement of the Wage Act. The Court stated that “The fact that, in cases like the present one, an employer whose Wage Act liability for treble damages and attorney’s fees has been extinguished will nonetheless be exposed to simple contract liability for an additional three-year period [under contract law] is consistent with both the public policy objectives underlying the Wage Act and the status of an employment agreement as a contract like any other.”
This ruling contradicts, in part, rulings of federal courts in numerous jurisdictions that the Fair Labor Standards Act and any additional state wage-and-hour laws preempt claims for compensation on unjust enrichment, quantum meruit or other common law equitable theory. See, e.g., Clougher v. Home Depot U.S.A., Inc., 696 F. Supp. 2d 285, 295 (E.D.N.Y. 2010)(“This Court dismisses Clougher’s equitable claims for quantum meruit and unjust enrichment as duplicative of his statutory claim. As his New York Labor Law claim provides an adequate legal remedy for the conduct alleged, his equitable claims are hereby dismissed”).
As we recently noted, the Massachusetts Supreme Court has issued a series of rulings, all with the same message: employee protections in the area of wages and compensation under Massachusetts law are robust, and ambiguities in the law may well be construed to favor workers when disputes arise. Massachusetts employers must carefully craft compensation policies to comply with the law and avoid disputes.