The SJC recently held that an out-of-state forum selection clause in an employment contract may, in certain situations, be unenforceable under the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, §§ 148, 150 .
In Melia v. Zenhire, Inc., Zenhire, Inc. entered into an employment contract with Melia. A forum selection clause in the agreement dictated that all disputes arising out of the contract or the employment relationship were to be resolved in New York. The agreement also contained a provision stating that it would be governed and construed in accordance with the laws of New York. After five months, Zenhire allegedly began to experience financial difficulties and failed to pay Melia compensation due under the contract. Melia brought suit in Superior Court alleging that Zenhire violated the Wage Act. Melia argued that the forum selection and choice-of-law provisions in his employment contract were unenforceable "special contracts" that attempted to avoid application of the Massachusetts Wage Act.
The SJC rejected Melia's arguments and held that the forum selection clause was enforceable. The court held that "a forum selection clause operates as a special contract only when three conditions are met: the employee's claim is covered by the Wage Act; the court of the forum State, applying its choice-of-law principles, would choose a law other than that of Massachusetts to govern the dispute; and application of the foreign law will deprive the employee of a substantive right guaranteed by the Wage Act." Here, the Court found, a New York court applying New York's choice-of-law rules would apply Massachusetts law because Melia lived and worked in Massachusetts and, therefore, Melia could not satisfy the second of these three conditions. As a result, the Court concluded, the forum selection clause was not an unlawful "special contract," and Melia must bring his claims in New York.
Although the employer prevailed in this case, the SJC's decision is a cautionary tale that forum selection clauses cannot be used to evade the Wage Act's requirements.