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

52 | Massachusetts Wage & Hour Peculiarities, 2022 ed. © 2022 Seyfarth Shaw LLP cannot circumvent this requirement by having an employee authorize deductions. 289 What does this mean? The Court offered the following examples of permissible deductions: (1) where there is proof of an undisputed loan or wage advance from the employer to the employee; (2) theft of the employer’s property by the employee, as established in an “independent and unbiased proceeding” with due process protections for the employee; or (3) where the employer has obtained a judgment against the employee for the value of the employer’s property. 290 The Court opined that there are other circumstances in which a set-off would be valid, such as when they are made pursuant to a collective bargaining agreement, but declined to provide any further guidance. 291 As a practical matter, the Court’s decision means that employers should limit deductions for theft or damage to property to those circumstances where fault and value have been determined by a court of law or government agency. In another decision, the SJC held that an employer cannot lawfully withhold wages to an employee pending the customer’s payment for the employee’s services, even if the employer and employee agree that such wages are not earned until customer payment is received. 292 The Court found that such “chargebacks” violate the “no special contracts” language of the Wage Act because “they are not a valid setoff; they correspond to no ‘clear and established debt owed to the employer by the employee.’” 293 Citing Camara , the Court also held that an employer may not deduct the cost of liability insurance from an employee’s wages because those “costs are related to future damages that may never come to pass, and even if they do, may not be the responsibility of the employee.” 294 In the wake of these decisions, employers should carefully review all deductions taken from employees’ wages. Similarly, all set-offs and “clear and established debts” should be carefully documented. For example, if an employer provides a loan or wage advance to an employee, the employer should obtain signed, written authorization at the time the loan or advance is made, which states the amount loaned or advanced and clearly sets forth the timing and amounts of any deductions that will be taken from the employee’s wages. While no decision has specifically addressed deductions for the accidental overpayment of wages—a scenario that arises frequently—the employer should follow the same procedure in those circumstances. In other words, the employer should get a signed, written authorization stating the date and amount of the overpayment and the date of specific checks from which the deductions will occur. In any of these scenarios, total deductions cannot, in any wage payment, bring an employee’s pay below minimum wage for each hour worked. 289 Camara , 458 Mass. at 763. 290 Id . at 763 n.13. 291 Id . 292 Awuah , 460 Mass. at 492-93 (cit ing Camara , 458 Mass. at 760). 293 Id . at 493 (quot ing Somers v. Converged Access, Inc. , 454 Mass. 582, 593 (2009)). 294 Id . at 497.