Claims for nonpayment of wages under the Massachusetts Wage Act are on the rise and the stakes are high. If an employee wins a Wage Act lawsuit, damages are automatically tripled and the court is required to award attorney’s fees. With that in mind, the recent ruling of the Supreme Judicial Court in Crocker v. Townsend Oil points out the need for careful drafting of severance agreements, settlement agreements and other documents which contain a release of claims by a current or former employee.
The case involved a dispute over employee classification and overtime pay. Crocker was a delivery truck driver who was classified as an independent contractor rather than an employee. After being terminated in 2007, he retained counsel to challenge the termination. The parties negotiated a settlement, the company paid him several thousand dollars, and Crocker signed a settlement agreement containing a general release including typical language, i.e “the employee forever releases, remises and discharges the company and its shareholders, directors, officers, employees and agents of and from any and all debts, demands, actions, causes of action, suits, accounts, covenants, contracts, agreements, damages, and any and all claims, demands, obligations and liabilities whatsoever of every name and nature, both in law and equity that the employee now has or ever had or may in the future have, arising out of or in connection with any events occurring on or prior to the date hereof.”
Despite signing the settlement agreement, in 2009 Crocker brought a claim alleging that he should have been classified as an employee and that he was owed overtime. The Superior Court judge denied the employer’s motion for summary judgment and ruled that the language of the Wage Act made the release unenforceable.
On appeal, the company argued that the broad language of the general release applied to all claims including a claim under the Wage Act. In response, Crocker argued that based on the language of the Wage Act, it is legally impossible to release such a claim no matter how broad the language.
The SJC rejected both arguments and chose a middle course. The court ruled that it is possible to release a Wage Act claim, but only if the release specifically states that it applies to claims under the Wage Act. Because the release used by Townsend did not contain this specific language, Crocker was allowed to proceed with his lawsuit.
The case demonstrates the importance of including clear and specific language in severance and settlement agreements with employees.
The Boston employment attorneys at Bartlett Hackett Feinberg P.C. represent both employers and employees with respect to overtime and minimum wage claims, as well as other a wide variety of other employment law issues. For more information, please contact Howard Brown at firstname.lastname@example.org or at (617) 422-0200.