Employer Avoids Massachusetts Wage Claim Through The Use Of Well-Drafted Employment Agreement
The importance of drafting employment agreements carefully could not be more evident in the superior court case of Boesel v. Swaptree, Inc., where the court rejected a high-level executive's ability to bring a claim under the Massachusetts Wage Act after his former employer delayed his bonus payments.
Boesel, Swaptree's President, argued that Swaptree violated the statute when it failed to pay him his non-discretionary "Annual Bonus" in 2010 and 2011 in a timely manner entitling him to treble damages and attorneys' fees. He claimed that the Bonus was earned on a pro-rated basis over the course of the year, that the bonus was intended to be part of his base salary, and further, that the parties had agreed before they entered into their employment agreement that the bonus was non-contingent.
The Court easily disposed of Boesel's claim. First, it rightly noted that generally, bonuses constitute "wages" covered by the Wage Act only when they are non-discretionary and/or where they are subject to a contingency. As to the latter, bonuses that are contingent on the employee remaining with the company for a defined period of time do not qualify as a "wage." Clearly, the Court found, given the language in the employment agreement, the "Annual Bonus" provided for that contingency and therefore, did not qualify as a "wage."
In support of this conclusion, the Court found (1) that the parties had distinguished between "Annual Bonus" and "Base Salary," making them payable at different junctures; (2) that term "Annual" in and of itself demonstrated a...
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