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Judge: unpaid wages not ‘constructive discharge’

Counsel fees no help in establishing jurisdiction

subway, unpaid wages

The plaintiff sued after his employer, a Subway franchise, stopped paying him.

In the absence of discriminatory or retaliatory motivation on the employer’s part, an at-will employee who resigns due to the non-payment of wages is not entitled to assert a claim of constructive discharge, a Superior Court judge in Massachusetts has determined.

Moreover, the judge seemingly suggested that attorneys’ fees should not be included when evaluating whether the Superior Court’s $25,000 jurisdictional threshold had been met.

The plaintiff employee alleged that, after six months of work during which he often received no overtime and worked longer hours than the law allows for someone his age, his boss stopped paying him altogether. He argued that amounted to “imposing work conditions so intolerable that a reasonable person would feel compelled to resign.”

In opposing the defendants’ motion to dismiss, the plaintiff contended that the defendants were relying on an “overly narrow interpretation” of “constructive discharge,” which was unsupported by case law. According to the plaintiff, the employer seemed to be arguing that such claims are limited to cases involving discrimination, harassment or constitutionally protected activities.

The plaintiff countered that constructive discharge had been invoked in connection with Wage Act violations and that whether the defendants’ conduct rose to the level of constructive discharge “is a question of fact not suitable for resolution on a motion to dismiss.”

But Judge J. Gavin Reardon Jr. found that the plaintiff’s constructive discharge claim lacked merit.

“It is clear from the complaint that plaintiff only complained to the defendants after the defendant stopped paying him, allegedly because the defendant ran out of money,” Reardon wrote.

It was undisputed that the plaintiff was an at-will employee, the judge added.

“An at-will employee who resigns due to non-payment of wages has no claim for constructive discharge,” he stated, citing the Supreme Judicial Court’s 1992 decision Wright v. Shriners Hosp. for Crippled Children.

The two-page decision is Sullivan v. Paul Silva LLC, et al.

Retaliation or not?

Whether an employee can maintain a viable constructive discharge claim when wages are withheld in retaliation for complaining about discrimination, a Wage Act violation, or some other public policy concern might be an open question, acknowledged the defendants’ Milford attorney, Ryan P. Avery.

But in Sullivan, the plaintiff simply stopped receiving pay and, when he asked his employer for an explanation, was allegedly told that the employer did not have the money to pay him.

While it may be unusual for an employee to respond to such a statement by working for another three weeks, essentially for free, Avery noted that Sullivan may have some relevance in other, more common circumstances. He cited as examples when an employee merely sees his wages cut, or when there is a disagreement over an employee’s contract, in which the worker might later sue under a constructive discharge theory for the higher level of commissions to which he thinks he was entitled.

The plaintiff’s attorney, Emily E. Smith-Lee of Sharon, said she has refiled her client’s complaint in District Court, with the retaliation aspect of the constructive discharge claim articulated perhaps a bit more clearly.

Meanwhile, Boston attorney Kevin G. Powers said the Wright case, which involved a nurse who was terminated, allegedly in retaliation for writing to a higher-up detailing concerns about her co-workers and bosses, “does not address the issue raised by the complaint” in Sullivan.

If the constructive discharge claim in Sullivan were to go before the Appeals Court, Powers said he could not predict the result.

“The argument to the Appeals Court would be that the employer violated the public policy set forth in the Wage Act by failing to pay the plaintiff, and that no reasonable person would have continued to work for no pay, and therefore there was a constructive termination,” he said.

Boston lawyer Peter J. Moser said Judge Reardon may have stated it a bit too broadly when he said that an employee who resigns due to non-payment of wages has no claim for constructive discharge.

“Put in a different context, that’s not necessarily true,” he said.

But, Moser added, you still “need a hook,” such as a violation of a contractual provision, discrimination or retaliation against protected activity, to establish constructive discharge.

An initial issue in the District Court case is shaping up to be whether Reardon dismissed the plaintiff’s constructive discharge claim with or without prejudice. Avery said he would be moving to dismiss that claim, arguing res judicata.

But Smith-Lee said a close look makes it clear that Reardon dismissed all the claims without prejudice.

Even though the Wage Act, G.L.c. 149, §150, allows for treble damages, the parties agreed that G.L.c. 212, §3 establishes that single damages are what is used to measure whether the Superior Court has jurisdiction. But the statute is silent when it comes to whether attorneys’ fees can be considered, Avery said. State-court precedent on the issue is sparse, he added.

Avery suggested that the jurisdictional limit would be rendered almost meaningless if attorneys’ fees are part of the calculation of “amount in controversy,” given that a plaintiff unwilling to settle could always drive legal fees up to $30,000 or $40,000 by the end of the case.

However, Waltham attorney Allyson E. Kurker said her reading of Sullivan is that the judge concluded that, because the plaintiff’s damages would be less than $10,000, any award of counsel fees was unlikely to lift the total damages figure above the $25,000 threshold.

“However, this ruling should not distract employers from remembering that, typically, attorneys’ fees can be counted toward the amount in controversy when a statute — like the Wage Act — mandates payments of fees,” she said, citing the 2004 Superior Court decision Polion v. Walmart Stores, Inc.

‘Sandwich artist’ goes hungry

Plaintiff Tyler Sullivan was a few days shy of his 16th birthday when he went to work as a “sandwich artist” for the Auburn Subway store owned by Paolo J. Silva.

According to his complaint, when Sullivan started in November 2015, he initially worked approximately 45 hours a week at $9 an hour. By January 2016, he had been given a raise to $11.50 an hour and the title of “manager,” after which he worked approximately 70 hours a week.

In addition to not being paid time-and-a-half for his overtime hours, Sullivan alleges that Silva stopped paying him in late March 2016. When he asked for an explanation, Silva allegedly replied that he and the franchise “don’t have the money.”

Sullivan continued to work for three weeks before resigning, according to the complaint. When he left, he was owed approximately $10,000 in unpaid wages and overtime.

His complaint alleges violations of the Wage Act, the Massachusetts Minimum Fair Wage Law, and a claim for constructive discharge. Related to the constructive discharge claim, the plaintiff requested two years, or $46,000, of unearned wages from the date of his resignation, according to the memorandum the defendants filed in support of their motion to dismiss.

In the aftermath of Reardon granting the defendants’ motion to dismiss all counts on July 20, the plaintiff filed a complaint asserting similar claims in Worcester District Court on Aug. 17.

Do attorneys’ fees count?

With regard to the Superior Court’s jurisdiction, the plaintiff argued that the court was allowed to consider attorneys’ fees given that, if he prevailed on any of his wage claims, the award of fees would be mandatory.

The plaintiff estimated the amount of unpaid wages he was owed at $10,000. That figure might grow once the parties had been given access to all the relevant time and payroll records, he said.

The plaintiff said he had accrued a little over $7,100 in attorneys’ fees and costs to that point, and it was “virtually certain those fees will exceed the $15,000 necessary to reach the threshold if the case does not resolve and proceeds through discovery and trial.”

But once Reardon struck the constructive discharge count and claim for future loss of earnings, all that was left was the $10,000 in unpaid wages, the judge concluded.

“The plaintiff’s claim for attorney’s fees stands on the same footing as the claim for future lost wages, and does not change the jurisdictional calculation,” he stated.

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