Waivers and Releases of Massachusetts Wage Claims

By Evan J. Spelfogel

On December 17, 2012, in Crocker v Townsend Oil, the Massachusetts Supreme Judicial Court invalidated a settlement agreement, waiver and release to the extent it purported to release claims under the Massachusetts Wage and Hour Laws, but did not expressly include that statute by name among the claims being released. Specifically, the Court held:

We...conclude that a settlement or contract termination agreement by an employee that includes a general release, purporting to release all possible existing claims will be enforceable as to the statutorily provided rights and remedies conferred by the Wage Act only if such an agreement is stated in clear and unmistakable terms.  In other words, the release must be plainly worded and understandable to the average individual, and it must specifically refer to the rights and claims under the Wage Act that the employee is waiving.  Such express language will ensure that employees do not unwittingly waive their rights under the Wage Act.  At the same time, this course preserves our policy regarding the broad enforceability of releases by establishing a relatively narrow channel through which waiver of Wage Act claims can be accomplished.

In settling claims with departing employees and offering severance packages in return for all-encompassing written waivers and releases, employers often list by category in the settlement papers, among others, all tort and contract claims, claims for emotional distress, all public policy and statutory claims including, without limitation, all claims that might arise under anti-discrimination laws and wage and hour laws.  We have frequently advised employers that they would be better protected if they listed expressly at least the relevant major federal and state statutes.  In light of Crocker, employers who wish to obtain binding waivers of wage and overtime claims under Massachusetts law must be careful to list the Massachusetts Wage Act expressly, in the settlement documents.

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