EARNED SICK PAY DOES NOT CONSTITUTE WAGES UNDER THE WAGE ACT

In a recent decision, the Supreme Judicial Court in Mui v. Massachusetts Port Authority held that unused sick time does not constitute “wages” under the Massachusetts Wage Act. The Court’s holding is attuned to previous holdings which have refused to expand the meaning of “wages” under the Massachusetts Wage Act. See Weems v. Citigroup, 452 Mass 147, 155-156 (2009). (Discretionary bonuses are not considered wages); Boston Police Patrolmen’s Association Inc. v. Boston, 453 Mass. 718, 720-721 (2002). (Tax-exempt deferred compensation is also not considered wages).

In Mui, the Plaintiff had been a longtime employee of the Massachusetts Port Authority until he applied for retirement one week after his employer initiated disciplinary proceedings against him. Under the Port Authority’s sick pay policy, separated employees who were eligible and who were not discharged for cause were entitled to receive compensation equal to a percentage of the employee’s accrued unused sick time. The Plaintiff had accumulated 2,232 hours of earned sick time which amounted to $46,755.41 owed under the agency’s sick pay policy. The Port Authority delayed paying the Plaintiff for the value of his accrued sick time for approximately one year after the payment was due. The Plaintiff sued to allege that the Port Authority had violated the Wage Act by not timely making payment of the sick pay amount.

The SJC first examined the plain language of the Massachusetts Wage Act. The Court noted that while there is no specific definition of “wages,” the Act states that “‘wages’ shall include any holiday or vacation pay due to an employee under an oral or written agreement.” The Court found it significant that while the Act specifically included holiday and vacation pay as wages, it did not include sick pay and stated: “we will not add language to a statute where the Legislature itself has not done so.” The Court further noted that “sick time is to be used only when the employee or a family member is ill” which differs from vacation time “which can be used for time away from work for any reason.” The Court also relied on the language of Massachusetts Earned Sick Time law (“employers shall not be required to pay out unused earned sick time upon the separation of the employee from the employer.”) finding that since employers are allowed to adopt “use it or lose it” sick time policies, sick time should not be considered wages under the Massachusetts Wage Act. The Court regarded the payment of unused accrued sick time as a “contingent bonus.” Under the Act, contingent compensation is considered a wage only when they “ha[ve] been determined and due and ha[ve] become payable to [the] employee.” G.L.c. 149, §148. The only contingent compensation recognized under the Act is commissions.