Written by Gauri Punjabi
A recent decision from a Massachusetts appeals court should give some Massachusetts managers and directors one less thing to worry about. Simply having the title of manager or director alone is insufficient for individual liability under the MA Wage Act; rather, the individual must “control, direct, and participate to a substantial degree in formulating and determining corporate policy.”
In Perrin v. The Collaborative Engineers, Inc., the court refused to hold five of the individually named defendants – who were full-time employees, directors, and minority shareholders of CEI – personally liable under the Wage Act for unpaid wages owed to the employee solely because of their managerial job titles. The Court instead looked at the individuals’ job functions and determined they could not be held personally liable because there was no evidence that they performed any corporate management functions. In contrast, the sixth individually named defendant could be held personally liable under the statute because he alone ran the company’s day-to-day operations, including signing all checks and maintaining responsibility for accounts payable. Moreover, he was also the president and treasurer, two positions expressly assigned individual liability under the statute.
While Perrin slightly limits the scope of individual liability under the Wage Act, individual managers and directors responsible for corporate management, including the president and treasurer, can still face liability for unpaid wages. As violations of the Wage Act result in mandatory awards of trebled damages and attorney's fees to prevailing employees, employers should periodically review their payroll records and practices to ensure employees are paid all earned wages, including overtime, in accordance with the statute.