Good morning!

Your response to last month's topic told me something important - employee-related issues are a hot button in the small business community. So, at the risk of wearing out my welcome with my readers, let me share with you yet another "gotcha" on the employee termination front, courtesy of the laws and the Courts of this fine Commonwealth.

Do you know what you must pay a terminated employee on the day of firing? You may think you do, but read on and test your knowledge.

Cordially,


Marijo McCarthy, Esq.
President, Widett and McCarthy, P.C.

Last month, I highlighted two requirements imposed upon small business owners by the Commonwealth of Massachusetts upon the hiring or firing of an employee. Another of these little "gotcha" provisions arose last Monday when a client called to tell me that that her company was getting ready to do its first employee termination. Naturally, a little anxious about the whole process, my client wanted to discuss the situation and prepare, as best she could, for any fall-out from a hostile reception by a terminated employee.

After commiserating with her on the unenviable job ahead, I prefaced my advice with the caveat "don't kill the messenger" since I had to give her the bad news that the Commonwealth of Massachusetts Wage Act (Mass. General Laws Chapter 149, Section 148) requires an employer to pay a terminated employee all "wages" due in full on the date of termination.

"Okay," she said, "that seems fair." But, here's the catch: the law says that the term "wages" shall include "any holiday or vacation payments due an employee under an oral or written agreement."

Wait, it gets better! If a small business owner fails to pay these "wages" on a timely basis, the employee can file a complaint with the Attorney General's Office asking the Attorney General not only to require the employer to pay in full, but impose civil or criminal penalties against his former employer.

And, we're not through yet! If the employee pursues the complaint and wins, the "award" can include attorneys' fees and treble damages. In other words, the former employee could collect up to 3 times the wages which should have been paid! Huh!!??

Now, having said all that, nothing is ever black and white and, when the courts get involved in these kinds of issues, the waters sometimes become crystal clear, but more often than not, end up a very muddy pond, indeed. So, what is a small business to do when the law (Wage Act) is vague on a definition (does vacation time constitute wages?), the Courts refuse to fully clarify the issue, and the Attorney General's Office (which enforces the Wage Act), has decided that "wages" include vacation and must be paid?

Well, one remedy for an anxious small business owner is to review the company's policies concerning vacation - before an employee termination arises - and be sure those policies are crystal clear.

Here are some tips:

1. What does the company hiring letter say about vacation? For instance, does the company have a "use it or lose it" policy and is that clearly stated?
   
   
2. What does the company benefits policy statement say about vacation? For instance, is the employee entitled to his or her vacation upon hiring or is there a stated time frame for earning benefits, including vacation?
   
   
3. What is the company's policy "in practice" (often quite different from its written policy which frequently sits on a shelf gathering dust)? For instance, if the company has an accrual policy in print (whereby the employee "earns" vacation on a monthly basis rather than being entitled to a full vacation on day one), but has made exception after exception in the past for favored employees, the company has effectively set a precedent which will be hard to deny an un-favored employee being terminated.
   

Nowadays, the documentation of your employees has become even more important with the linking of the nation's immigration services with the U.S. Department of Homeland Security.

While the average small businessperson may not think about immigration services in connection with hiring employees, did you know that there is a Federal form (Form I-9) which all employers, regardless of size, have been required to complete for all new employees since November 6, 1986?

At the time this law was announced, many of us scurried around filling out Form I-9, checking employees' identification, and adding the forms to our employees' personnel files. But, as happens with many new laws which do not require employers to file a form with a state or Federal agency, interest and implementation have waned and, in many instances, employers have forgotten all about Form I-9!

Take heart, however, you can download, print, read the instructions and begin to use Form I-9 today (for all of the hordes of employees we are hiring in this economy!). Visit uscis.gov/graphics/formsfee/forms/I-9.htm and get caught up.

Sometimes a state government agency can provide help to the chronically harried small business owner in his or her effort to comply with the myriad number of new laws and regulations flowing down from Beacon Hill.

For example, Massachusetts law requires employers with six or more employees to adopt a written policy against sexual harassment.

On October 25, 1996, the Massachusetts Commission Against Discrimination ("MCAD"), which administers this law, actually published a model sexual harassment policy to assist employers to develop their own policies.

If you haven't had the time or resources to comply with the law on your own, you might find this model helpful, The model policy can be found at www.mass.gov/mcad/harassment.html .

Widett and McCarthy helps small business owners start, grow, acquire and sell their businesses.

We serve as "in-house counsel" . . . on-call when needed, but not part of the company overhead. Our best clients understand that the relationship between lawyer and client is a two-way street, built on information sharing and problem solving.

For more information regarding
how we can help you, click here.

• MCAD
• SBANE
• US SBA Office of Advocacy