Massachusetts’s Prevailing Wage Act is a comprehensive statute intended to provide an exclusive remedy for underpayment on public works projects. Some, but not all, of the provisions of the Prevailing Wage Act allow employees to hold corporate officers individually liable in certain circumstances. In a recent decision, Donis v. American Waste Services, LLC, the Massachusetts Supreme Judicial Court (“SJC”) held that employees suing their employer under the Prevailing Wage Act, for failing to pay prescribed prevailing wage rates on public works jobs, could not also recover from their employer’s individual officers under the Massachusetts Wage Act. The SJC found that permitting recovery under both statutes—on that sole basis—would be duplicative and contrary to the Legislature’s intent. The holding in this case is significant, in part, because it makes clear that, unless there is a separate, independent basis for filing a claim against an employer under the Wage Act, an employee cannot simply allege claims for underpayment of prevailing wage rates under both the Prevailing Wage Act and the Wage Act, naming corporate officers. This decision has broad implications for employers by continuing to protect their corporate officers from individual liability.
Defendant American Waste Services LLC (“AWS”) is a waste management company. Plaintiffs Elmer Donis and nine others worked for AWS as “shakers” on waste disposal trucks, loading waste into the trucks and compacting it. For five years, AWS had waste disposal contracts with four Massachusetts towns. Although the Prevailing Wage Act required AWS to pay its workers on those routes a certain hourly rate, AWS underpaid them, and the Plaintiffs sued AWS, its president, and its vice president for back wages.
The trial court granted partial summary judgment for the Plaintiffs, concluding that the Defendants’ chronic underpayment violated the Prevailing Wage Act and the Wage Act. The Defendants appealed, asking the SJC to decide “whether the plaintiffs could recover, under the Wage Act, for the defendants’ failure to pay wage rates required by the Prevailing Wage Act.” The SJC held that they could not and reversed the trial court’s judgment.
Different Statutes, Different Purposes, Different Remedies
In reaching its decision, the SJC compared both statutes’ purposes, structure, language, and remedies. The Wage Act requires employers to pay employees earned wages within a certain time period and was enacted to prevent employers from unlawfully withholding employees’ wages. The Prevailing Wage Act serves a narrower purpose, setting minimum wage rates on public works projects, to ensure that workers are paid fairly compared to those on private projects.
In terms of remedies, each statute provides its own private right of action for employees to sue employers, and allows employees to recover treble damages, attorneys’ fees, and costs—powerful tools for employees, and significant penalties for employers.
A key difference, however, is that the Wage Act permits employees to bring claims against corporate officers as individuals—not just against the company. By contrast, the Prevailing Wage Act only allows employees to bring such claims in limited circumstances, none of which applied in this case.
The SJC explained why both statutes are complementary and serve separate purposes. The Prevailing Wage Act establishes which rates are owed to certain employees and provides a mechanism for employees to recover from employers who do not pay those rates. The Prevailing Wage Act does not provide any recourse, however, against employers who withhold payment of those wages, or who retaliate against employees seeking to recover wages, which fall under the Wage Act. In that scenario, employees may have an independent basis for a claim under the Wage Act in addition to the Prevailing Wage Act.
Here, AWS failed to pay Plaintiffs the prevailing wage. Therefore, the SJC found that the central thrust of Plaintiffs claims fell squarely within the applicable section of the Prevailing Wage Act (§ 27F), which has its own remedy and does allow suits against corporate officers. There was no separate basis for the Plaintiffs’ Wage Act claims (e.g., that AWS withheld wages or retaliated against them), and therefore, AWS’s corporate officers could not be held personally liable.
The SJC acknowledged Plaintiffs’ concern that this result could allow unscrupulous officers to hide behind shell companies. The SJC explained, however, that the common law doctrine of “piercing the corporate veil” already exists to address that concern (though it requires a fact-intensive, multi-factor test that is hard to meet without proof of fraud).
Employers must continue to comply with all applicable wage laws. Donis holds that, unless there is separate independent basis for a Wage Act claim, employees are limited to the parameters of the Prevailing Wage Act section that applies, which may not allow them to pursue claims against individual corporate officers.
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