Awuah v. Coverall North America, Inc.
460 Mass. 484
Mass.2011Background
- Plaintiffs are Massachusetts residents who contracted with Coverall under janitorial franchise agreements alleging misclassification as independent contractors.
- Awuah II (D. Mass.) held that Graffeo’s misclassification claims proceed to certain wage-deduction issues.
- Massachusetts Wage Act §148 requires timely payment of wages earned, with limited statutory set-offs.
- District court found that accounts-receivable financing and chargebacks improperly defray earned wages and constitute invalid deductions.
- Court certified four questions to interpret Massachusetts law on wage payments, deductions, and insurance costs.
- This opinion answers the four certified questions with specific holdings and discusses related policy considerations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether accounts-receivable financing to pay an employee is lawful | Graffeo argues such advances are wages, not debt to be recouped | Coverall contends advances are permissible financing to speed payment | No; it improperly defers earned wages and violates §148/§150 |
| Whether damages include statutorily mandated insurance costs | Graffeo pays for workers’ comp costs; seeks those as damages | Employer argues costs are not damages incurred by misclassification | Yes; employee may recover insurance premiums paid by employee as damages incurred |
| Whether wages may be withheld if not earned until customer remits payment | Wages earned upon labor, not contingent on customer payment | Withholding aligns with customer payment delays | No; earned wages cannot be lawfully withheld or offset by customer delays |
| Whether employee may pay for employer-procured workers’ comp or insurance | Employee should not bear employer’s statutory costs | Employer and employee may contract to shift costs | No; such arrangements are impermissible under the Wage Act |
Key Cases Cited
- Camara v. Attorney General, 458 Mass. 756 (Mass. 2011) (statutory interpretation of §148 and prohibition on unearned deductions)
- Somers v. Converged Access, Inc., 454 Mass. 582 (Mass. 2009) (employer cannot recalculate wage rate retroactively; wage protections apply)
- Adams v. Tanner, 244 U.S. 590 (U.S. 1917) (public policy against paying for a job or higher costs to work)
- Beacon Hill Civic Ass’n v. Ristorante Toscano, Inc., 422 Mass. 318 (Mass. 1996) (public policy considerations in wage-related disputes)
- Howes Bros. Co. v. Unemployment Compensation Comm’n, 296 Mass. 275 (Mass. 1936) (workers’ compensation as business cost borne by employer)
- Opinion of the Justices, 309 Mass. 562, 309 Mass. 562 (Mass. 1941) (police-power basis for workers’ compensation obligations)