Under WARN, and Beyond? Massachusetts High Court Holds That Failure To Pay A “Back Pay” Award Does Not Give Rise To Wage Act Liability

It is an entrepreneur’s nightmare. The company you struggled to create goes out of business due to a lack of financing. As the company goes under, the employees sue. Out of money, the company does not defend itself in court and a multi-million dollar default judgment gets entered against it. When the company can’t pay the judgment, the former employees sue you individually. They argue that the company’s failure to pay the “back pay” judgment constitutes a violation of the Massachusetts Wage Act, M.G.L. c. 149, § 148, which imposes individual liability on certain corporate officers. The employees now seek to hold you individually liable for the whole judgment, plus treble damages and attorneys’ fees.