Massachusetts Wage Act Can Cover
Out-of-State Employees

Employment Law Alert, November 2011

In a recent decision, Dow v. Casale (No. 10-1343-BLS1), Judge Peter Lauriat of the Massachusetts Superior Court Business Litigation Session held that the Massachusetts Wage Act, M.G.L. c.149, §148 (the “Wage Act”), applies to an employee who lives and works outside of Massachusetts, so long as the out-of-state employee has “sufficient contacts” with Massachusetts.

The plaintiff in Dow v. Casale, Russell Dow, was a sales person for a Massachusetts-based video-conferencing company. Dow worked from his home in Florida but traveled frequently on behalf of his employer. Dow sued several officers and directors of his former employer under the Wage Act for unpaid commissions and vacation time. His employer argued that because Dow was based in Florida, the Massachusetts Wage Act should not apply to him. However, the court disagreed and held that Dow could continue with his lawsuit, since he had “sufficient contacts” with Massachusetts so as to be subject to the Wage Act. In determining that Dow had sufficient contacts with Massachusetts, the court paid special attention to the fact that (1) Dow used a Massachusetts business mailing address on his business card; (2) his telephone and fax numbers were Massachusetts numbers; (3) he had many customers in Massachusetts whom he frequently visited; (4) he was in almost daily contact with his employer in Massachusetts; and (5) all of the paperwork for Dow’s sales was completed in Massachusetts.

The court did not address one factor which could be potentially relevant in determining whether an employee has sufficient contacts with Massachusetts, namely whether Dow filed an income tax return, or paid taxes in Massachusetts. Assuming that he paid Massachusetts taxes (since his employer did not apparently argue otherwise), this may be an important tip for Massachusetts employers. That is, employers should take steps to treat out-of-state employees as such for tax purposes, so as to provide an argument that they have not been considered employed in the Commonwealth.

Thus, the Dow v. Casale decision grants the protections afforded employees by the Wage Act to out-of-state employees who have significant contacts with Massachusetts, and leaves Massachusetts employers who fail to comply with the Wage Act open to potentially significant liability, since the Wage Act imposes mandatory treble damages and attorney’s fees. In light of this decision, Massachusetts employers should re-examine their compliance with the Wage Act as to out-of-state employees who have regular contacts with Massachusetts.

For more information on this topic, please contact a member of our Employment Practice Group.

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