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EmploymentWage and Hour

Release Bars Wage Claim Despite Lack of Specific Reference to Massachusetts Wage Act

By August 11, 2014No Comments

District-MassachusettsUntil recently, it was thought that an employee’s waiver of rights to sue for past due compensation or wages as reflected in a signed release of claims had to be spelled out with precision.  Since the Supreme Judicial Court’s 2012 decision in Crocker v. Townsend, in which the Court held that an employee’s release did not prevent him from filing a later claim under the Wage Act, many employers have included a specific reference to “the Massachusetts Wage Act” in their release provisions.  However, a recent U.S. District Court decision – MacLean v. TD Bank, N.A. – states that a specific reference to the Wage Act is not required, and a release bars any claim for unpaid wages as long as the language is clear that the employee is waiving his or her right to be paid wages.

The Plaintiff in MacLean signed a severance agreement that involved the payment of approximately $500,000 in exchange for a release of all claims.  The release provision included a waiver of claims “related to the payment of wages, bonuses, incentives, and other compensation” and rights relating to “compensation agreements.” However, the release did not specifically reference the Wage Act.  Later, the Plaintiff filed suit, claiming that the Defendant failed to compensate him for 23 days of PTO time he had accrued.

Despite the Plaintiff’s argument that the release he signed was insufficient based upon the Crocker decision because there was no specific citation to the Wage Act, the U.S. District Court disagreed and held that the Crocker decision did not require a specific citation to the Wage Act.  Instead, the Court opined that in order to validly release all claims under the Wage Act, a release only required a reference to the “rights and claims” under the Wage Act.  Accordingly, the Court held that the release was sufficient to waive the Plaintiff’s later claims for non-payment of PTO time because it included “plainly worded and understandable references to the rights Plaintiff was giving up under the Wage Act”.

The MacLean decision is instructive, as many employers responded to the Crocker decision by including specific citations to the Wage Act in their releases.  The U.S. District Court has now clarified that those specific citations are not necessary.