Massachusetts: Sick Pay is Not Considered Wages Under State Law

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January 29, 2018

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In Tze-Kit v. Massachusetts Port Authority, the Massachusetts Supreme Judicial Court stated that sick pay is not considered wages under the Massachusetts Payment of Wages Law.  Employers are not required to pay out accrued, unused sick pay as part of an employee’s final pay upon separation of employment.

In Tze-Kit, the employer’s sick leave policy allowed for a percentage of an employee’s accrued, unused sick leave to be paid out on separation of employment, depending on the employee’s tenure. If discharged for cause, no pay out of sick leave would be provided. In Tze-Kit, a discharged employee disputed the nature of their separation of employment, and eventually received a payout for accrued, unused sick leave after a lengthy arbitration–over a year after the plaintiff was discharged.  The plaintiff then sued the employer for violating the Massachusetts Payment of Wages Law, which requires final wages to be provided to discharged employees on the date of separation.

The Supreme Judicial Court reviewed the Payment of Wages Law and stated that the language did not expressly refer to sick leave under the term “wages.” The court also stated that, unlike other types of payments defined as wages (e.g., vacation, commissions, or holiday pay), use of sick leave is conditional, and employees are therefore not typically compensated for accrued, unused sick leave.

Though this decision clarifies that sick leave does not need to be paid out upon separation of employment, employers who utilize combined paid time off and sick leave banks should still follow final pay requirements under state law.

Action Items

  1. Review final pay policies and procedures for compliance.
  2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2018 ManagEase

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