Employment – Wage Act – Expenses – Noncompete agreement

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Where a judge dismissed a Wage Act claim asserted by a plaintiff who alleged that she was fired in retaliation for complaining about the defendant employer’s expense reimbursement system, the dismissal order was erroneously based on a determination that expenses do not constitute wages.

Reversed.

Sufficiency of complaint

“Just days after an at-will employee reiterated her displeasure to her employer at having long been denied a part of her compensation, she was fired.

“A complaint, filed by the aggrieved employee (plaintiff), set out a series of interlinked facts, sufficiently detailed, which, when read together, suggested the corporate employer and its president had violated section148A of the Massachusetts Wage Act, G.L.c. 149, sectionsection148 et seq. (Wage Act), by terminating the plaintiff’s employment in retaliation for her speaking out to senior management about the employer’s failure to pay timely the sums due under her employment contract. In addition to the Wage Act claim, the plaintiff also sought compensatory relief, on common-law liability theories, and declaratory relief (see G.L.c. 231A), from a written noncompete agreement that she had signed, at the behest of the employer, as a condition of employment. Contesting the legal viability of the complaint, the defendants jointly filed a Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), motion. A judge of the Superior Court allowed the motion and dismissed the complaint in its entirety.

“On appeal from the dismissal of her complaint by the judge, the plaintiff argues that her complaint alleges plausible entitlements to relief against PerkettPR, Inc. (PPR), and Christine Perkett, PPR’s president (collectively, the defendants). …

“We conclude, for the reasons set forth herein, that the complaint plausibly suggested an entitlement to remedial relief for violation of section148A of the Wage Act, and declaratory relief as to a written noncompete agreement, which allegedly was unreasonably burdensome as to restrain unduly her right to secure gainful employment in her field of expertise (public relations). Claims for tortious interference and misrepresentation also were plausibly stated. …

“Without any explanation, the motion judge ruled, as matter of law, that ‘business expenses’ are not covered by the Wage Act, in ordering the dismissal of the plaintiff’s statutory claims. In effect, the judge’s ruling implicitly failed to acknowledge the somewhat intricate section148 claim that underlies this action. The judge’s ruling cannot stand.

“Section 148A of the Wage Act commands, ‘No employee shall be penalized by an employer in any way as a result of any action on the part of an employee to seek his or her rights under the wages and hours provisions of this chapter.’ section148A, first par., inserted by St. 1977, c. 590. Section 148A provides that an employer ‘who discharges or in any other manner discriminates against any employee because such employee has made a complaint to the attorney general or any other person … shall have violated [section 148A] and shall be punished …’ (emphasis added). section148A , second par., as appearing in St. 1999, c. 127, section144.

“The legislative policy advanced by section148A is clear: ‘to encourage enforcement of the wage laws by protecting employees who complain about violations of the same.’ … In order to maintain an actionable claim under section148A, a plaintiff is not obliged to successfully prove her right to seek recovery of the untimely paid ‘wages’ in question. It is enough that a plaintiff, as here, reasonably believed the remuneration in question fell within the scope of the Wage Act. …

“In the instant matter, the complaint alleges the existence of an expense reimbursement arrangement in which the employee is reimbursed for business expenses incurred on behalf of the employer. In the ordinary course, the violation of a standard expense reimbursement arrangement would not constitute a violation of the Wage Act because the reimbursement is not compensation ‘earned’ by ‘labor, service or performance.’ … However, this complaint alleges that the employer engaged in a pattern of nonpayment, coupled with continued demands that the employee advance expense monies in ever-increasing amounts, and fired her when she refused to advance any more money for the employer’s benefit.

“The Wage Act prohibits an employer from exempting itself from the timely and complete payment of wages by ‘special contract … or by any other means.’ section148, sixth par. This provision is strictly enforced. …

“… [A]s noted above, section148 prohibits not just ‘special contract[s],’ but also wage reductions achieved by ‘any other means,’ and all but ‘valid set-off[s].’ The relevant precedent makes it clear that an employer may not reduce wages by, or condition the full and timely payment of wages on, payments by an employee to or on behalf of the employer. Wages must be paid both in a timely manner and in full. The arrangement alleged here falls short on both fronts.

“Fairly read, the complaint alleges that the otherwise permissible expense reimbursement arrangement designed to benefit employees was abandoned and replaced with a policy and practice which required the employee, under penalty of discharge, to advance, indefinitely, expenses for the employer’s benefit. Viewed in the light of Camara [v. Attorney Gen., 458 Mass. 756 (2011)] and Awuah [v. Coverall N. America, Inc., 460 Mass. 484 (2011)], this was a sufficient allegation of ‘reasonable belief’ under Smith v. Winter Place LLC, 447 Mass. [363, 367 (2006)], to withstand a rule 12(b)(6) motion on the retaliation claim. …

“The plaintiff sought a declaration that the noncompete provision in her contract was unenforceable, as too broad. Her complaint was sufficient to survive a motion to dismiss. … Although the one-year term of the provision has long since expired, if the provision is determined to be unenforceable, it would still be open to the plaintiff to prove her damages. …”

Fraelick v. PerkettPR, Inc., et al. (Lawyers Weekly No. 11-071-13) (17 pages) (Brown, J.) (Appeals Court) Motion to dismiss heard by Cornetta, J., in Superior Court. Joseph L. Sulman for the plaintiff; William J. Royal Jr. for the defendants (Docket No. 11-P-1832) (June 6, 2013).