In an effort by airlines to increase revenue, they began charging customers fees for checking their baggage in curbside. These fees have led to a decrease in the tips that “skycaps” used to receive from airline passengers checking in their bags curbside. In DiFiore v. American Airlines Inc., 454 Mass. 486 (2009), a group of “skycaps” who worked for American Airlines and a group who worked for an agency hired by American Airlines to perform curbside check in at Logan Airport filed suit as a violation of the Massachusetts Wage & Hour act, M. G. L. c. 149 § 152, alleging that the instituted fees which were collected by American Airlines and G2 belonged to them.

American Airlines argued that since they were not the “employer” of the “skycaps” hired by G2 they did not owe fees to those “skycaps.” This was because in the Massachusetts Wage & Hour act the term “employer” is used indicating that service fees charged by someone other than the employer did not have to be given to the employees performing the service. This led the Supreme Judicial Court to determine what is meant by a “service charge” in the text of the statute. In August 2009, the SJC determined that while the statute does include the term “employer” that the legislature did not intend to allow employers, such as American Airlines, to contract with an outside agency and gain the power to keep service fees earned by service employees. Rather, the SJC found that the purpose of the statute is to ensure that service employees were given the service fees charged for their services and allowing a company to hire an outside agency to hire service employees would nullify the central purpose of the protection given to service employees in the first place.

Subsequent to the SJC’s ruling both parties filed motions in U.S. District Court which they ruled on December 23, 2009. American Airlines filed a motion for relief from judgment arguing that Massachusetts Tips Law is preempted by the Airline Deregulation Act of 1978. The Court ruled that the motion for relief from judgment must be denied because the Airline Deregulation Act does not preempt Massachusetts Tip Law. The Plaintiff’s filed a motion to amend the judgment arguing that (1) they should receive treble damages under the amended M. G. L. c. 149 § 150 (2) that all of the collected fees were not included in the original judgment. The Court found that since the legislature did not expressly state that the amendment should be applied retroactively treble damages are discretionary and are not to be applied in this case. However, the Plaintiff’s were able to obtain additional feed collected between March 1, 2008 and April 7, 2008.

Massachusetts law recognizes that the relationship between employee and employer is an “at-will” relationship unless there is a clear expressed or implied contract. This means that this relationship can be terminated at any time by either the employer or employee with or without reason or notice. However, Massachusetts courts have recognized that it is not always clear whether or not a contractual relationship between an employee and employer exists.

One way in which an unintended implied contract may form is through an employer’s handbook or manual that is distributed to employees at the commencement and through out their tenure of employment. The Supreme Judicial Court has laid out a non-exclusive list of factors which can be used when considering if an employment manual may create an implied contract between employer and employee. Factors indicating that a manual does not create an implied contract are: “(1) the employer retained the right to modify unilaterally the manual’s terms; (2) the manual provided that it was for “guidance” as to the employer’s policies; (3) there was no negotiation between the employer and the employee regarding the terms of the manual; (4) the manual stated no term of employment; (5) the employer called no special attention to the manual; and (6) the employee did not sign or manifest his assent to the manual or acknowledge that he understood its terms.” Buttrick v. Intercity Alarms, LLC, 2009 Mass. App. Div. 97 (2009) (Citation Omitted). The Supreme Judicial Court has concluded that while these factors are helpful in determining if an implied contract is present the central question is “whether an employee would reasonably conclude that the employer was presenting the manual as a statement of the conclude that the employer was presenting the manual as a statement of the conditions under which employment could continue.” Id., citing O’Brien v. New England Te. & Yel. Co., 422 Mass. 686, 664 (1996) (internal quotations omitted).

Massachusetts courts are comfortable finding the existence of an implied contract between employee and employer based upon the terms of their employment manual. Recently, the Massachusetts Appeals Court found in favor of Jeffrey Buttrick when he sued his employer, Intercity Alarms, for firing him in violation of the disciplinary policy set forth in the employment manual provided to him. Intercity Alarms’ employment manual met many if not all of the factors discussed above; however, they placed a strong emphasis on the importance of the employment manual. Including emphasizes the need for the manual to be signed because of the non-compete agreement within the text of the manual. Based upon the requirement to sign the manual, Buttrick believed that all of the terms, not just the non-compete terms, were binding upon him. While Buttrick had not signed the most up to date version of the manual he had signed previous manuals and followed the non-compete clause for two years following his termination. For the Court, Buttrick’s actions gave credence to the fact that he believed the manual was binding. Based upon Buttrick’s belief and Intercity Alarms’ emphasis on the importance of signing the manual the Appeals Court found that it was reasonable to find that there was an implied and binding contract between Buttrick and Intercity Alarms.

Given the courts willingness to find an implied contract based upon an employment manual where an employer may not have intended for one to be present employers may be employing contracted employees without knowing it. The burden has been placed upon employers to carefully craft their employment manuals in order to avoid creating these unintentional implied contracts. It is important for employers to present employment terms and policies in a manner which will not create employment contracts with employees they intend to employ “at-will.”

The Business Litigation Division of the Superior Court had an interesting quandary to consider in early 2009. When an employee of a Massachusetts company who has signed a non-compete agreement leaves the company for a competitor in California is the non-compete enforceable? In EMC Corp. v. Donatelli, this is the precise question that had to be answered by the court when Donatelli left EMC Corp. for Hewlett-Packard, a direct competitor in California. In this specific case there is particular interest on the part of employers because unlike Massachusetts, where the contract was signed, California traditionally does not enforce non-compete agreements. The Superior Court had to decide if it would issue an injunction against Donatelli to prevent his employment with EMC’s competitor when California courts may not enforce the injunction. Ultimately the Superior Court issued the injunction stating Massachusetts strong interest in protecting the relationship between its employers and employees. If the court would not issue the injunction then the door is left open for Massachusetts residents to sign non-compete agreements with Massachusetts employers to negate the enforceability by moving to a state where non-compete agreements are unenforceable. Subsequent to the injunction being issued Donatelli was able to provide proof to the Superior Court that he was able to take an alternate position at Hewlett-Packard that did not directly compete with his position at EMC. The court altered their original injunction to allow Donatelli to take the alternate position but barring him from taking the position he initially wanted.

Both EMC and Donatelli could view the Superior Courts decision in this case as victorious. For EMC and other employers it establishes that Massachusetts Superior Courts will enforce non-compete agreements to the furthest extent of Massachusetts law. Meanwhile, Donatelli is able to take a position at Hewlett-Packard, albeit, not the one he left the company for. There are few lingering legal issues which will need to be sorted out in the future. Will the higher courts of Massachusetts follow the analysis and rule put forth by the Superior Court to reinforce the ruling? The biggest loose end is whether or not the California court will enforce the injunction. To do so, in a California choice of law analysis Massachusetts contract law would have to be followed.

When a jury found that Wal-Mart terminated Cynthia Haddad from her job as a pharmacist for discriminatory purposes a jury awarded her two types of damages, front pay and punitive damages, both of which were affirmed by the Supreme Judicial Court (“SJC”). Haddad v. Wal-Mart Stores, Inc. The trial judge threw out the awarded punitive damages utterly confusing the SJC. The SJC granted direct review to both Haddad’s appeal of removing the award of punitive damages and Wal-Mart’s appeal of the front pay damages. The SJC has re-instated the punitive damages awarded by the jury and affirmed the front-pay awarded.

Front Pay Damages

Wal-Mart challenged the jury’s award of 19 years of front pay calling it excessive. When an individual is unlawfully terminated from a position for discriminatory purposes the defendant company may be liable for front pay damages. Front pay is intended to compensate a plaintiff for their future financial injury caused by the defendant employer’s intentional discriminatory actions. While a plaintiff retains a duty to mitigate front pay damages, for instance finding another job, an employer can be held liable for lost earnings and benefits that are no longer available to the plaintiff due to the employer’s unlawful discrimination in the form of front pay. The Haddad court discussed five established factors for the judge or jury to consider when determining the appropriate amount of front pay without overcompensating the injured employee: “(1) the amount of earnings, including salary and benefits, that the plaintiff would have received between the time of trial and the plaintiff’s projected retirement date; (2) the plaintiff’s probable retirement date; (3) the amount of earnings that the plaintiff would probably have received from another employer until her retirement, which would reduce any front pay award; (4) the availability of other employment opportunities; and (5) the possibility of future wage increases and inflation.” Id. While the court has seemingly laid out a simplistic step by step analysis for a jury to consider, a concrete formula has not been established to be presented to juries. While the court clearly states that actions taken by the plaintiff to mitigate their damages must be considered subsequent to determining front pay using the five factors they do not explain how the jury’s calculation of front pay should be discounted. Without providing a clearly defined formula for neither the five factor analysis nor the discount the court leaves open the possibility of inaccurate and miscalculated front pay calculations made by juries.

Punitive Damages

After punitive damages were awarded at trial Wal-Mart filed a motion, which was granted, to have the award vacated on two grounds: the award was excessive and their actions were neither egregious nor outrageous as required by statute for punitive damages to be awarded. While a long line of case law establishes that behavior must be egregious or outrageous for punitive damages to be warranted the SJC had not yet clearly defined egregious or outrageous. Especially, not when being awarded for a violation of Massachusetts employment discrimination statute, M. G. L. c. 151B. In Haddad, the SJC set clear parameters for how a judge shall instruct a jury when presented with an employment discrimination case where punitive damages may be awarded. First and foremost the employer must have engaged in behavior beyond intentional discrimination. If based upon the evidence a jury could reasonably find that the employer’s behavior went beyond intentional discrimination judge shall tailor the jury instructions to one or more of the following factors: (1) whether a conscious effort was made to diminish the plaintiff because of their class or the class the plaintiff belongs to, (2) whether the defendant disregarded possible harm cause by their behavior, (3) the actual harm to the plaintiff, (4) the defendant’s actions subsequent to learning about possible harm, and (5) the duration of and/or concealment of the defendant’s behavior. By setting forth these factors the SJC has filled a void in the law by establishing a new standard which defines outrageous or egregious behavior in employment discrimination cases. This allows parties to properly assess when it is appropriate for punitive damages to be both considered and awarded in discrimination cases.