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SJC Holds Wage Act Claims May Be Waived in Employee Release

The Massachusetts Supreme Judicial Court recently held that a general release of claims executed by an employee will not bar a claim under the Massachusetts Wage Act unless the release specifically refers to the statute.  Crocker v. Townsend Oil Co., Inc., et al, 464 Mass. 1 (2012). 

Townsend Oil Company, Inc. delivers home heating oil to customers throughout Massachusetts.  Plaintiffs, Charles Edward Crocker and Joseph Barrasso, worked as full-time drivers for Townsend.  Upon termination, each signed a general release of claims.  The releases did not mention the Wage Act nor did they expressly state that the employees were giving up their rights to claims under that statute.  Plaintiffs ultimately brought a claim against Townsend to recover unpaid wages and overtime owed under the Wage Act.

The Massachusetts Wage Act states in pertinent part, “[n]o person shall by a special contract with an employee or by any other means exempt himself from this section or from section one hundred and fifty.”  M.G.L. c. 149 §148.  The Court noted that the purpose of the statute is to provide “strong statutory protection for employees and their right to wages.”  Crocker, 464 Mass. 13.  To that end, the Court questioned the legislative intent behind this provision and whether or not an employee’s right to bring a claim under the Wage Act could in fact be contractually waived.

The Court looked to its decision in Warfield v. Beth Israel Deaconess, 454 Mass. 390 (2009) for guidance.  In that case, the Court considered a different legal issue - whether an arbitration clause in an employment contract should apply to gender discrimination claims under state law.  In that opinion, the Court recognized that public policy considerations play a critical role in the interpretation of contracts.  It ultimately held that in order to enforce an arbitration clause in an employment contract, the contract must “state clearly and specifically” that such a claim falls within the purview of the arbitration clause.  Warfield, 454 Mass. 400.  The Court found this application particularly instructive in Crocker and approached the release of an employee’s Wage Act claims from the same perspective.

Ultimately, the Court held that absent express language stating that Wage Act claims are being released, an agreement with generic language will not be effective in waiving such claims.  In other words, unless the release agreement makes clear in explicit and unmistakable terms that claims under the Wage Act are released, they will be preserved.  The Court stated that “the release must be plainly worded and understandable to the average individual, and it must specifically refer to the rights and claims under the Wage Act that the employee is waiving.”  Crocker, 464 Mass. 14.  The Court reasoned that employees must be on notice of what claims they are giving up at the time of signing, particularly considering the spirit and the language of the Wage Act.  With this requirement, employees will not unwittingly waive their rights.

While seemingly a victory for unknowing employees, the Crocker decision provides clarity for Massachusetts employers in a formerly grey area.  The Court has essentially instructed employers that if a general release includes language specific to the Wage Act those claims will be barred.  This development is noteworthy in that we now know that claims under the Wage Act may in fact be contracted away in a properly drafted release.