On May 8, 2012, Morgan, Brown, and Joy, obtained a significant victory on behalf of our client concerning the enforceability of a forum selection clause in an out-of-state employment agreement.
In Melia v. Zenhire Inc. et al. the Supreme Judicial Court of Massachusetts (SJC) affirmed a trial court order dismissing a lawsuit against MBJ client Zenhire, Inc., of New York. The decision affirms that forum selection agreements are presumed enforceable in the wage and hour context, notwithstanding a state statute that bars special agreements that void substantive state wage law protections. The Court also articulated an important new legal standard for determining when an employer may require its employees to litigate state wage claims outside of Massachusetts.
The plaintiff, a former Massachusetts employee of Zenhire, entered an executive employment agreement that required all employment claims to be adjudicated in the courts of New York. The executive sued Zenhire in Massachusetts Superior Court seeking compensation he said was due under Massachusetts law, including the state “Weekly Payment of Wages” law (the Wage Act). He did so despite a clear, written agreement to bring all employment claims in the courts of New York. The trial court dismissed the case based on the forum selection clause. On appeal to the SJC, the employee argued that the state Wage Act’s prohibition against “special contracts” that deprive employees of the substantive protections of the law also prevents employee and employer from agreeing to settle their disputes in any forum other than a Massachusetts court.
Noting that the text of the Wage Act does not “guarantee venue in a Massachusetts court,” the SJC rejected the employee’s argument, determining instead that there is a “presumption that forum selection clauses are enforceable with respect to Wage Act claims.” The Court held that an employee seeking to overcome the presumption of enforceability of a forum selection clause “must produce some evidence indicating that (1) the Wage Act applies; (2) the selected forum’s choice-of-law rules would select a law other than that of Massachusetts; and (3) application of the selected law would deprive the employee of a substantive right guaranteed the Wage Act.”
The SJC cautioned that a contract that deprives an employee of “substantive rights guaranteed by the Wage Act violates public policy and is unenforceable.” Accordingly, employers seeking to enforce forum selection clauses still bear the burden of demonstrating that the clause “does not operate as a ‘special contract’” that would deprive the affected employee of his or her substantive rights, including the right to recover triple damages under the Wage Act. In Zenhire, however, the Court found that dismissal was appropriate because the plaintiff would not be prevented from pursuing a claim to recover his purportedly unpaid wages under Wage Act in the courts of New York.