Will Market Basket Owe Terminated Employees For Accrued Sick Time ?

It’s not easy being Market Basket.  First you have a major corporate shake-up involving the controlling family who have been fighting for years.  Then your workforce objects to the Board’s actions and tries to get the Board to reverse course.  This dispute results in the effective shut down of many Market Basket stores.  Then management decides to get tough and threatens to fire and replace employees who won’t return to work.  They even organize a jobs fair.  (A risky strategy and horrible PR move, in my opinion.  If it fails, they have no next step.)  To top it off, the Attorney Generals from Massachusetts and New Hampshire send you a letter warning you that they will fully prosecute any and all violations of state wage laws if Market Basket screws up when terminating employees.  That should get corporate’s and legal’s attention.

As an employment lawyer, I am interested in the letter sent by the AGs.  The AGs remind Market Basket that it has to pay all terminated Massachusetts workers on the last day of employment.  New Hampshire employees can be paid within 72 hours.  This is pretty standard legal stuff.  But then, the letter goes on to say:

“The wages due include any bonuses, earned sick time, holiday or vacation pay and benefit plan contributions due under any written or oral agreement.”

Now I agree with the AGs on everything but “earned sick time.”  It has always been understood that employers do not have to pay employees for earned but unused sick time.  I did some research and was unable to find any statement or guidance from the AGs requiring employers to pay earned sick time to a terminated employee.  So, why are the Mass and NH AGs making this statement?  I don’t know, but I have two guesses.

My best guess is that Market Basket employees are entitled to paid sick leave under a company policy and the AG’s are just reminding Market Basket to follow its own polices.  This could be true of a union contract as well but I think Market Basket employees are all non-union.  A second possibility is that Market Basket has a “paid time off” policy and gives employees a set number of PTO days without differentiating between sick, vacation, and personal days.  When companies establish PTO policies, it is recommended that the policy identify the number of days of PTO that will be counted as vacation when paying terminated employees.  If there is not set number of vacation days, the employer may be required to pay for all accrued PTO upon termination.  In New Hampshire, employers can decide what payments will be made when an employee is terminated by having a written policy.

So, unless Market Basket has a policy requiring it to pay employees for accrued sick time when they are terminated, I don’t think the AGs can force Market Basket to pay employees for sick time.  Until I hear otherwise (and if I do, I will let you know), I will continue to advise that employers do not have to pay employees for accrued sick time when an employee is terminated or resigns unless a company policy says gives a right to payment for sick time.