Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

42 | Massachusetts Wage & Hour Peculiarities, 2022 ed. © 2022 Seyfarth Shaw LLP vacation like other wages under the Wage Act. 227 The Massachusetts Attorney General’s Fair Labor Division has issued an advisory on vacation policies that sets forth its interpretation of the law relevant to vacation pay. 228 The Attorney General’s interpretation of the Wage Act, as stated in that advisory, has been treated with deference and some of its provisions have been given effect by the Massachusetts Supreme Judicial Court (SJC). 229 The advisory asserts that withholding vacation payments constitutes withholding wages and violates the Wage Act because an employee may not forfeit earned wages, including vacation payments, by agreement. 230 If an employer terminates an employee, whether or not for cause, or if an employee resigns his or her employment voluntarily, the employer must pay the employee for all the time worked through the termination date, including any earned, unused vacation time payments. 231 Employers and employees cannot contract around the requirement that an employee must be compensated for earned vacation upon termination. 232 However, an employer may establish as part of the terms of employment “the amount of paid vacation the employee will receive and/or a specific time of the year when the employee can take a vacation, depending on the needs or demands of the business.” 233 The employer may also establish procedures for scheduling vacations. 234 Employers will benefit from drafting unambiguous vacation pay policies because Massachusetts courts have resolved ambiguities in favor of employees. 235 a. Caps and “Use It or Lose It” Policies Employers may cap the amount of vacation time that employees can accrue or earn. 236 For example, an employer may state in its policy that after accruing a total of ten days of vacation, an 227 M.G.L. ch. 149, § 148; Elec. Data Sys. Corp. v. Attorney Gen. , 454 Mass. 63, 67 (2009) (EDSC II); Hahnfeldt v. Newman , 94 Mass. App. Ct . 1120, 2019 Mass. App. Unpub. LEXIS 88 (2019) (“vacat ion pay due under an agreement is specifically included in the definit ion of wages pursuant to G. L. c. 149, § 148”); Morash , 490 U.S. at 110; Massachuset t s At torney General Advisory 99/1. 228 Massachuset t s At torney General Advisory 99/1. See also Souto v. Sovereign Realty Assocs., Ltd. , 23 Mass. L. Rpt r. 386, 2007 WL 4708921, at *3 (Mass. Super. Ct . Dec. 14, 2007). 229 EDSC II, 454 Mass. 63. 230 Id. at 68; Massachuset t s At torney General Advisory 99/1. Examples of impermissible agreement s include vacat ion policies that condit ion the payment of vacat ion t ime on continuous employment or that require employees to provide not ice prior to quit t ing. EDSC II, 454 Mass. at 69 (“ [I]f an employee is ‘discharged from . . . employment ,’ the value of the vacat ion benefit earned up to that date and that would st ill be available if the employee remained at the jobmust be ‘paid in full on the day of his discharge.’”). 231 EDSC II, 454 Mass. at 69-71; Massachuset t s At torney General Advisory 99/1. Cont inued payment of salary or other benefit s after terminat ion does not alleviate this obligat ion. Dixon v. City of Malden , 464 Mass. 446, 451-52 (2013). 232 EDSC II, 454 Mass. at 70 (“ [T]he Wage Act would have lit t le value if employers could exempt themselves simply by draft ing cont ract s that placed compensat ion out side it s bounds—as [the employer] at tempted to do, when it stated that ‘vacat ion t ime is not earned.’”). 233 Massachuset t s At torney General Advisory 99/1. 234 Id. 235 Elec. Data Sys. Corp. v. Attorney Gen. , 440 Mass. 1020, 1020-21 (2003) ( EDSC I) (holding that personnel policy which st ipulated that “ [i]f you leave the company, you do not receive vacat ion pay for unused vacat ion t ime” only applied to employees who voluntarily left the company because policy was ambiguous and ambiguity should be resolved in favor of employee). 236 Massachuset t s At torney General Advisory 99/1.