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Massachusetts Employers Must Characterize Unused Vacation Pay Properly

The Supreme Judicial Court of Massachusetts ruled last week that a city cannot recharacterize vacation pay from a recently-terminated administrator. The case centered on the 2007 termination of Gary Dixon, administrator of the McFadden Memorial Manor nursing home in 2007. Dixon brought suit against the city of Malden, which operated the nursing home, seeking $13,700 in unused vacation pay.

Despite high quality evaluations, McFadden had proven unable to fill to capacity, and the cost of repair was estimated at $1 million. Dixon was terminated while the city was deliberating whether or not to put public money toward renovation of the nursing home.

The Superior Court dismissed the suit due to the city's continued payment of additional pay and benefits, the Supreme Judicial Court reversed the decision. The SJC instruced the Superior Court to award Dixon vacation pay, attorneys' fees, and court costs. The Supreme Judicial Court noted that payment of salary and benefits post-termination does not substitute for payment of unused vacation time, which was shown to be 50 days. Under the Massachusetts Wage Act, a terminated employee is explicitly entitled to payment of unused vacation upon termination.

Massachusetts employers and employees alike should take heed of this ruling. Raymond Law Group can help make sure clients are advised of the requirements of way payment laws.

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