A U.S. District Court judge for the District of Massachusetts has denied an employer’s motion to dismiss, finding that bonuses which are non-discretionary, as well as unreimbursed employee expenses, including travel expenses can be protected by the Massachusetts Wage Act.

United States District Court of Massachusetts

SUMMARY: (court decision – opens in PDF)

“Plaintiff George Serebrennikov’s Amended Complaint [Doc. No. 28] alleges breach of contract against Defendant Proxet Group LLC (‘Proxet’) (Count I); violations of the Massachusetts Wage Act, M.G.L.c. 149, §148 (the ‘Wage Act’) against Proxet and Defendant Vladimir Medvedovsky (Count II); and breach of the implied covenant of good faith and fair dealing against Proxet (Count III). …

“Plaintiff argues that he is owed wages for August 2022 because he had completed in July all the work that Defendants required him to complete by August 31, 2022. Defendants argue that Plaintiff cannot recover wages for August 2022 because he ‘did not perform work for or with Proxet’ during the month of August. … Plaintiff states that he worked with Proxet through July 28, 2022-and does not allege that he worked in August 2022. … Therefore, Plaintiff has not sufficiently alleged that he was an employee under the Wage Act in August 2022 and he fails to satisfy the first element of a Wage Act claim for his August 2022 salary. …

“Plaintiff has sufficiently alleged a claim for payment of a $100,000 non-discretionary bonus for 2022 under the Wage Act. Bonuses must be non-discretionary to be recoverable under the Wage Act. … Massachusetts courts also consider extrinsic evidence of alleged subsequent oral modifications of a contract, even if the contract contains a provision stating that the contract may only be amended in writing. …

“Plaintiff alleges that the parties orally agreed to a non-discretionary bonus of $50,000 around 2016-17 and a non-discretionary bonus of $100,000 in 2021, and that Defendants conformed to the first agreement by consistently paying Plaintiff his bonus between 2017 and 2021. … While Defendants characterize Plaintiff’s allegations as conclusory, … Plaintiff’s identification of specific time periods of the alleged oral agreements, along with a conforming pattern of payment, is sufficient to allege a plausible claim that the parties did orally agree to a non-discretionary bonus. …

“Plaintiff has sufficiently alleged a claim for payment of unused vacation days under the Wage Act. Payment for unused vacation days can be considered ‘wages’ under the Act if provided for under the terms of ‘an oral or written agreement.’ … Evidence of subsequent oral modifications of an agreement is permitted regardless of any provision in the original agreement forbidding subsequent modifications. … This evidence can be ‘inferred from the conduct of the parties and from the attendant circumstances of the case.’ …

“Plaintiff alleges that the parties agreed to orally modify their employment agreement to include payment of unused vacation days. … He alleges that Defendants regularly compensated him for unused vacation days and documented his accrued vacation time. … He claims to be owed 15 days of vacation time valued at $16,000. … Under the Wage Act, ‘a terminated employee is entitled to all accrued vacation benefits on the day of discharge.’ Reuter v. City of Methuen, 489 Mass. 465, 468, 184 N.E.3d 772 (2022). Assuming the truth of these factual allegations and drawing reasonable inferences in Plaintiff’s favor, the Amended Complaint [Doc. No. 28] sufficiently alleges a claim of wages owed for unused vacation under the terms of an oral employment agreement. …

“Plaintiff has also sufficiently alleged a claim for unreimbursed employee expenses under the Wage Act. Requiring employees to front employee expenses, including travel expenses, can constitute wage reductions under the Wage Act. … This is because the Wage Act bars wage reduction ‘by any other means,’ and a company requiring the plaintiff to ‘travel many miles using his own vehicle while working on behalf of [the company] reduces his wages ‘just as effectively as if the employer had … deducted funds from [his] wages.’ …

“Defendants argue that Plaintiff does not have sufficient factual support for his alleged $450,000 recovery. … However, Plaintiff alleges that he spent most of his employment abroad in three different countries, Defendants failed to reimburse him for employee expenses, and he bought plane tickets in reliance on the parties’ agreement that he would work until August 31, 2022. … This is enough to allege a plausible claim that Plaintiff incurred travel expenses as part of his work for Defendants, and that Defendants failed to pay them. More specific facts that justify a $450,000 recovery, rather than a smaller amount, can be developed through discovery.”