A former policeman who claimed the city that had employed him violated a settlement agreement to reimburse him for unpaid vacation time could not sue the municipality under the Wage Act, the Appellate Division of the District Court in Massachusetts has ruled.

The city argued that the officer’s suit did not fall under the Wage Act because the payments at issue were not “earned” wages.

The Appellate Division agreed, affirming a District Court judge’s summary judgment for the city.

“The payment was an amount that was negotiated in order to settle a disputed claim,” Judge Sabita Singh wrote for the panel. “Rather, the payment was contingent upon [the officer’s] performance of his obligations under the settlement agreement that consisted, essentially, of the dismissal of his grievance [under a collective bargaining agreement]. Payments based on such contingencies are not ‘earned wages’ under the Wage Act.”

The five-page decision is Jason v. City of Lowell.

‘Another reminder’

Maria E. Sheehy of the City of Lowell Law Department called the ruling “another reminder that you can’t use the Wage Act to enforce a settlement agreement unless, in fact, wages were earned.”

A decision the other way would not have been in keeping with the intent behind the Wage Law, which is to prevent the unreasonable detention of wages, Sheehy added.

Daniel S. Field of Morgan, Brown & Joy in Boston, who represents employers in labor disputes but was not involved in the case, said the ruling is consistent with prior caselaw from the Supreme Judicial Court’s 2009 decision in Electronic Data Sys. Corp. v. Attorney Gen.

In that case, known as EDS II, the SJC held that once an employee has accumulated vacation pay under a company policy, the pay becomes due and is considered “earned” under the Wage Act.

“The [Appellate Division’s] gloss is consistent with [EDS II], which seems to indicate that, in this context, compensation earned under an agreement must be furnished in exchange for work,” said Field, former chief of the attorney general’s Fair Labor Division.

Field also noted that while the Appellate Division did not discuss the sick pay component of the officer’s dispute, accrued sick leave does not constitute “wages” within the meaning of the Wage Act.

Elise Busny of Pinkham Busny in Woburn, who represents employees in Wage Act cases, said she was not surprised by the ruling.

She also said, however, that when settling a claim like the one in Jason, an employee can try to protect himself via an “agreement for judgment” stating that if one party breaches the agreement, the other party has the right to file for a judgment for automatic treble damages and attorneys’ fees — which the officer in the case was seeking in his Wage Act dispute.

“I don’t think many employers would agree to that, but it’s certainly a possibility,” Busny said.

Richard K. Sullivan of Milford represented the officer. He could not be reached for comment prior to deadline.

Airing of grievances

Plaintiff Brian B. Jason began working as a police officer for the city of Lowell in 1975. As a member of the police union, his employment was subject to a collective bargaining agreement.

At some point in time, the city denied the plaintiff certain injury-leave benefits, and on July 3, 2008, the union filed a grievance on his behalf.

The parties resolved the grievance through a settlement agreement dated Dec. 24, 2008.

Under the agreement, Jason was to retire at the end of the year and drop his grievance. In return, he was to receive reimbursement for 50 percent of the vacation time he used between May 6 and Oct. 20, 2008, and for all sick or vacation time he used from Oct. 21 to Dec. 24, 2008.

The agreement also specified that Jason be credited with the sick and vacation time within 30 days of the agreement.

On Jan. 29, 2009, the plaintiff received a check for $8,179.54 pursuant to the agreement.

Because the payment came later than expected and was for less than the anticipated amount, Jason sued the city in Lowell District Court alleging violation of the Wage Act, which states that a departing employee must be paid, in full, “wages earned by him” within a certain time period. The time period in Jason ended on Jan. 8, 2009.

On July 2, 2009, the city forwarded another check for $3,574.16, explaining that it had only recently become aware that it owed additional money under the agreement.

Jason filed a motion for summary judgment, arguing that under the Wage Act, an employer cannot obviate a suit simply by paying the amount due after a complaint has been filed.

The city moved for summary judgment as well, claiming the money owed under the settlement did not constitute “earned wages” under the act.

District Court Judge James H. McGuinness Jr. granted the city’s motion and denied that of the plaintiff, who subsequently appealed.

Proper ruling

The Appellate Division rejected the plaintiff’s argument that the payments in dispute involved “earned wages.”

“Although vacation payments are undoubtedly wages under the Wage Act, they still must be ‘earned’ in order to come within the statute,” Singh said. “Here, Jason failed to establish that he had earned vacation pay under the employer’s vacation pay policy.”

Instead, the judge continued, the city only owed the plaintiff payment as a result of the agreement to settle his grievance.

“The payment was an amount that was negotiated in order to settle a disputed claim,” Singh said.

Because the payment was contingent on the plaintiff performing his obligations under the agreement and not based on anything he had earned under the terms of his employment, the Appellate Division concluded, “the trial court properly allowed the city’s motion for summary judgment.”