New England Biz Law Update
A recently enacted Massachusetts law that provides immunity to nonprofit institutions of higher education from certain state Wage Act claims does not offend due process when applied retroactively to bar a lecturer’s putative class action against Boston University over the alleged late payment of her salary, a U.S. District Court judge has found.
The new law involved in the case applies to universities and hospitals.
The plaintiff in the case sued BU in February 2025, alleging the school violated the Wage Act by paying her salary on the last business day of each month rather than on a weekly or bi-weekly basis.
The school moved for judgment on the pleadings after Massachusetts Gov. Maura T. Healey signed into law a budget bill that included a provision (Section 113) that immunizes nonprofit institutions of higher education and certain health care nonprofits from Wage Act claims challenging an employer’s monthly payment of wages.
The plaintiff argued that the retroactive application of Section 113 to her suit violated her right to due process under the U.S. Constitution and the Massachusetts Declaration of Rights.
However, Judge Richard G. Stearns found the retroactive application was consistent with due process under a three-part balancing test recognized in the 1st U.S. Circuit Court of Appeals.
In particular, Stearns found Section 113 served the public interest as evidenced by testimony by supporters of the measure before the Massachusetts Legislature.
“Private, nonprofit colleges in the Commonwealth ‘educate 290,000 students and employ nearly 100,000 people … and represent a $71 billion impact for the state each year,’” he wrote in granting the defendant’s motion. “And ‘[e]ven if the statute disproportionately benefits private actors, that does not mean it was enacted contrary to public interest.’”
In addition, Stearns denied the plaintiff’s motion to amend her complaint to assert claims against individual school officials who arguably would not be immune under the language of Section 113.
He further denied the plaintiff’s motion to certify to the Supreme Judicial Court questions concerning the constitutionality of applying Section 113 retroactively to her claims.
Retroactive immunity reasonable
Stearns analyzed the constitutionality of Section 113’s retroactive application using a three-part balancing test recognized by the 1st Circuit. He found that:
- Public interest supported the change, as demonstrated by legislative testimony about the devastating financial risks to nonprofit institutions from Wage Act claims over monthly pay schedules.
- The impact on individual rights was limited. The plaintiff had accepted monthly wages since 2015 and did not allege any underpayment, only that her wages were technically late under the Wage Act’s standard schedule.
- The scope of the statute was appropriately narrow. Section 113 applies only to claims brought between July 1, 2024, and September 30, 2028, and only where payment was made in full on a monthly basis.
Because the statute does not shield employers from all Wage Act liability but only from specific claims about monthly pay when wages are fully paid, Stearns concluded that it did not violate due process.
He also rejected the plaintiff’s arguments that Section 113 was impermissibly “special legislation” or that it stripped her of available remedies in violation of provisions of the Massachusetts constitution.
Key learnings from the case
The ruling offers reassurance to Massachusetts nonprofits in higher education and health care that recent Wage Act immunity legislation will hold up under constitutional scrutiny, even when applied retroactively.
Still, institutions should ensure that they clearly document pay practices and align policies with any written agreements to stay within the bounds of the new law’s protections.
