Massachusetts employers face some of the toughest wage and hour laws in the country, and even a minor payroll mistake can lead to costly penalties. From misclassifying independent contractors to missing final paycheck deadlines, compliance missteps can result in automatic triple damages—no matter the employer’s intent. To help businesses navigate these complex regulations, Commonwealth Payroll & HR President Jeff Plakans recently sat down with wage and hour attorney Jack Gearan of Greenberg Traurig. Together, they broke down the biggest compliance risks and shared key insights to help employers stay on the right side of the law. Below, we highlight the most pressing wage and hour issues—and what you need to know to protect your business.
Independent Contractors vs. Employees: The ABC Test
One of the biggest pitfalls for employers is misclassifying employees as independent contractors. Massachusetts law has a strict three-part test—often called the ABC Test—that employers must meet to classify a worker as an independent contractor.
Jack Gearan explained, “To be an independent contractor in Massachusetts, the worker must (A) perform their work free from the employer’s control, (B) do work that is outside the usual course of the employer’s business, and (C) have their own independently established trade or business.”
Failure to satisfy any one of these prongs means the worker is legally an employee. Even if a worker wants to be an independent contractor or signs an agreement saying so, the law still controls classification.
Understanding the Massachusetts Wage Act
The Massachusetts Wage Act requires that employees be paid on time, in full, and at least at the minimum wage. Employees also must be paid overtime if they work more than 40 hours a week—unless they qualify for an exemption.
Key points employers need to know:
- Final Paychecks: If an employee is terminated, they must receive their final paycheck on their last day, including any accrued vacation pay.
- Late Pay Consequences: A 2022 Massachusetts Supreme Judicial Court ruling (Reuter v. City of Methuen) reinforced that even a small delay in paying wages can result in triple damages being owed to the employee.
- Commission Pay: If an employee earns commissions, those commissions must be clearly defined in writing to determine when they are considered “earned” and owed to the employee.
Jack warned, “Even an honest payroll error can expose an employer to automatic treble (triple) damages. If you don’t make a payment on time, an employee has a claim—regardless of whether they initially accepted the late payment.”
Overtime and Misclassification Risks
Massachusetts follows the federal Fair Labor Standards Act (FLSA) rules on overtime but with some additional nuances. Employers should be particularly mindful of inside sales roles and commission-based employees. In a 2019 Massachusetts case, Sullivan v. Sleepy’s, the court ruled that even if an employee earns enough commissions to meet minimum wage, they are still entitled to additional overtime pay based on the state minimum wage. “Employers can’t use commissions as a substitute for paying overtime,” Jack noted. “Even if an employee is making a substantial amount in commissions, they still need to be paid time-and-a-half for overtime.”
Massachusetts Pay Transparency Act
A major change for employers is the Massachusetts Pay Transparency Act, signed into law by Governor Maura Healey. Starting October 29, 2025, employers with 25+ employees must:
- Disclose salary ranges in job postings
- Provide pay range information for promotions and transfers
- Comply with new pay reporting requirements if they have 100+ employees
Jack emphasized, “This law is designed to promote pay equity. Employers need to ensure they are prepared to publish good-faith salary ranges and respond to employee pay transparency requests.”
Commonwealth Payroll & HR Knows Compliance is Key
Massachusetts wage and hour laws leave little room for error, and even the most well-intentioned employers can find themselves facing costly penalties. Regularly reviewing payroll practices, employee classifications, and compliance policies is essential to protecting your business. While legal guidance should come from an attorney, having a trusted payroll and HR partner can help you stay ahead of compliance risks before they become costly mistakes.
At Commonwealth Payroll & HR, we help businesses streamline payroll, automate compliance processes, and manage HR responsibilities with confidence. Our team understands the complexities of Massachusetts employment laws and provides the tools and support to help you navigate them. Contact us today to learn how we can help keep your business compliant and running smoothly.
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