Applying the Massachusetts Wage Act and G.L. c. 151B to Out-of-State Employees

Issue March/April 2024 April 2024 By Michelle M. De Oliveira and Herling Romero
Labor & Employment Section Review
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From left: Michelle M. De Oliveira and Herling Romero

Two recent Massachusetts cases analyzed the question of whether an out-of-state employee may reap the benefits of Massachusetts law, including the Massachusetts Wage Act.

In Wilson v. Recorded Future, Inc., et al., 2023 U.S. Dist. LEXIS 72306, the U.S. District Court for the District of Massachusetts held that the Massachusetts Wage Act and the Massachusetts Fair Employment Practices Law (the state’s anti-discrimination statute, M.G.L. c. 151B) may apply even if an employee works and resides outside of Massachusetts. In Musachia v. Abiomed, Inc., Docket No. 2377CV00310, the Essex County Superior Court, however, held just the opposite, finding that the Massachusetts Wage Act did not apply to an out-of-state resident even though the employer’s headquarters were in Massachusetts. The prominent factual differences between the two cases ultimately resulted in contrasting results. 

In Wilson, the plaintiff neither lived nor worked in Massachusetts. Relying, in part, on these and other uncontested facts, the defendant sought to dismiss the plaintiff’s Massachusetts Wage Act and M.G.L. c. 151B claims. Contrary to the defendant’s desired result, the court emphasized that “[t]he Massachusetts Wage Act does not contain a provision expressly foreclosing the statute’s potential extraterritorial application,” and its remedies are not limited to employees who live or work in Massachusetts. To that end, out-of-state employees may reap the benefits and protections of the statute. Accordingly, the court in Wilson denied the defendant’s partial motion to dismiss the plaintiff’s complaint. 

The court emphasized that the relevant inquiry is whether Massachusetts has “the most significant relationship” to the individual’s employment. This analysis requires a review of the following factors: 

  • The state where the employer’s headquarters are located.

  • The place where the employee performed the work.

  • The frequency of interactions between the employee and the employer in Massachusetts.

  • Whether another state has a significant connection to the employee and the work performance.

  • Whether a contract between the employee and the employer has a choice-of-law provision.

  • Whether the employee regularly communicates with colleagues in Massachusetts.

  • Whether the employee’s job duties required travel to Massachusetts.

  • Whether the decisions regarding the employee’s termination and his compensation and commission payments were made in Massachusetts.

Relying on this framework, the court in Wilson concluded that Massachusetts had the most significant relationship to Wilson’s employment. The court reached this conclusion by relying on the following uncontested facts:

  • The employee resided in Virginia.

  • The employee frequently interacted with leadership and employees in the company’s Massachusetts headquarters.

  • The employee received frequent support for sales tools that he utilized from Massachusetts-based employees.

  • The employee traveled to Massachusetts to attend trainings, and for client meetings. 

As to the discrimination claim under c. 151B, the court emphasized that plaintiffs may plead a discrimination claim in situations in which “the employment decisions at issue were made in Massachusetts, though their effects were felt in another state.” To that end, the plaintiff was able to defeat the defendant’s request to dismiss the plaintiff’s discrimination claim because the plaintiff sufficiently pleaded the following facts:

  • The employer was headquartered in Massachusetts.

  • The employee regularly communicated with employees who were in Massachusetts.

  • The employee’s job duties required that he travel to Massachusetts.

  • Decisions relating to the employee’s compensation, commission and termination were made in the employer’s Massachusetts headquarters. 

Contrast this result with that in Musachia, where the court applied a “functional choice-of-law approach,” and, as a result, refused to broadly apply the Massachusetts Wage Act to an employee who worked remotely in Illinois. While the employer in Musachia was based in, and performed most of its fundamental business functions from, Massachusetts, several other factors pointed to Illinois as the proper choice of law. 

The defendant in Musachia moved for judgment on the pleadings or, in the alternative, summary judgment, and this time the court ruled in the employer’s favor, holding that the Massachusetts Wage Act did not apply. Specifically, the court emphasized the following:

  • The employee worked remotely from his home in Illinois.

  • The employee’s assigned work region was Illinois.

  • The employee did not interact with Massachusetts employees when performing his job duties.

  • The employee’s managers were in Utah and Tennessee.

  • The employee did not perform any work in Massachusetts.

  • Other than to attend an initial training, the employee never traveled to Massachusetts.

  • Illinois taxes were withheld from the employee’s paycheck.

  • The employee’s offer letter stated that the state in which he resided (Illinois) would apply to the employment relationship. 

Although the employer’s headquarters were in Massachusetts, the court held that the above factors supported the conclusion that Illinois — not Massachusetts — had the most significant relationship with the plaintiff’s employment, and therefore, the Massachusetts Wage Act did not apply. Moreover, there was no ambiguity in the offer letter’s choice-of-law provision, which stated that the law of the state in which the employee resided would apply to the employment relationship, and therefore, the employee knew that Illinois law would apply. 

These two cases are prime examples of how critical it is to closely examine the employer-employee relationship to determine whether Massachusetts law may apply to an out-of-state employee. Whether an employee resides or works in Massachusetts is an important factor to consider — but the inquiry cannot end there. Defense attorneys should take proactive steps with their clients to assess the factors outlined above to determine whether Massachusetts law may be applicable to the employer-employee relationship. The analysis is critically important because of the available remedies under the Massachusetts Wage Act, including employer liability for treble damages, plus attorney’s fees and costs, in the event that a client does not adhere to the statute. 

The cases provide equally important guidance to plaintiffs’ attorneys. Specifically, they provide a roadmap of the key facts and factors that are of paramount importance when properly advising a client of their rights under the Massachusetts Wage Act or G.L. c. 151B. For example: (a) where are the job duties being performed? (b) where does the employee reside? (c) where is the company located? (d) where are the supervisors with whom the employee will interact located? (e) who else does the employee interact with, and where are they located? (f) is there an offer letter and/or an employment agreement, and if yes, is there a choice-of-law provision? etc. The list goes on, but analyzing the question of whether an out-of-state employee may reap the benefits of Massachusetts law is worth doing from both sides of the equation. 

Michelle M. De Oliveira is a director/ partner at Kenney & Sams PC, where she advises on all aspects of employment-related matters, from drafting employment agreements and handbooks to conducting internal investigations and litigating complex issues before state and federal courts and agencies. De Oliveira guides management in issues relating to leaves of absence, employee discipline, hiring and firing decisions, accommodations, management trainings, and any other management need. She has authored numerous articles addressing employment law issues and has received multiple accolades for her contributions to the field. DeOliveira is a graduate of Northeastern University and Northeastern University School of Law, and is a member of the Northeastern University School of Law’s Alumni/Ae Association’s Board of Directors.

Herling Romero is an employment litigator and counselor at Kenney & Sams PC. As a litigator, Romero advises defendants and plaintiffs on employment matters related to wage and hour, allegations of discrimination and harassment, accommodations, and other disputes between employees and employers. As a counselor, Romero advises clients in daily business operations stemming from the employer-employee relationship, such as employment contracts, policies and handbooks, independent contractor relationships, severance agreements, restrictive covenants, noncompete agreements and offer letters.