The Supreme Judicial Court ruled today that executives at the Isis chain of baby and parenting stores are not personally responsible for the $2 million a federal judge ordered the chain to pay workers when the chain suddenly shut in 2014.
The ruling means the workers get nothing because along with shutting down, Isis went bankrupt and dissolved, which left it with no assets to pay off the court-imposed payment.
Isis's closing on Jan. 14, 2014 violated both state and federal laws requiring employers at companies with at least 100 workers to give at least 60 days' notice of shutdowns.
The workers sued ISIS in federal court, ISIS never showed up in court and a judge ordered the company to pay the workers a total of $2 million. But the company, insolvent, never paid a cent.
Workers then sued in Middlesex Superior Court, under the Massachusetts equivalent of the federal law, to get the individual directors to pay make up the $2-million judgment out of their own pockets.
But in its ruling today, the state's highest court agreed with a Superior Court judge who had dismissed the worker suit because the state law focuses on back wages "secured by virtue of work or service actually performed," and the federal award was not for work actually done:
The payment is not for work that has actually been performed but for work that would have been performed had the sixty days' notice been provided. In fact, the WARN Act provides that the amount of compensation "shall be reduced by . . . any wages paid by the employer to the employee for the period of violation" (emphasis added). 29 U.S.C. § 2104(a)(2)(A). The extraordinary relief the Wage Act provides -- individual liability, treble damages, and possible criminal liability -- is directed at particularly egregious behavior, i.e., not paying wages for work actually performed, and not at other employment violations. See Segal, 478 Mass. at 560 (purpose of Wage Act is to prevent employers' unscrupulous, long-term detention of wages). Furthermore, not only must the employees' work actually have been performed, but the wages also must be presently -- not just prospectively or potentially -- due to be paid by the employer.