Labor & Employment Law Daily Wrap Up, STATE-LAW CLAIMS—D. Mass.: Executive chairman of defunct entity not subject to liability under Massachusetts Wage Act, (Oct 9, 2025)

By Steven D. Cole, J.D.

The Massachusetts Wage Act’s potential imposition of personal liability on officers and agents with significant management responsibilities did not apply to the Executive Chairman, who acted merely as an involved officer and board member.

The former Chief Executive Officer (CEO) of a defunct business entity could not proceed with her action for lost wages, held a federal district court in Massachusetts. The CEO sued the company’s former Executive Chairman under the Massachusetts Wage Act, seeking to find him personally liable for deferred wages that she never received. However, she failed to adduce evidence that the Executive Chairman exercised significant management responsibilities over the company, especially with regard to the control of finances, so as to subject him to personal liability under the Act (Fall v. Battan, No. 24-11311-BEM (D. Mass. Oct. 3, 2025)).

Salary deferral. Plaintiff served as the CEO for Boston Security Token Exchange, LLC (BSTX) from June 16, 2018, until her resignation on December 1, 2022. When BSTX began to experience cashflow problems, the CEO and the BSTX Board of Directors (Board) agreed to defer her salary, beginning in October 2021. By the time of the CEO’s departure from the company, these deferred wages had not been paid.

Defendant was hired by BSTX on April 12, 2022, as its Executive Chairman, a position identified by the BSTX LLC Agreement as an officer of the company, authorized to “exercise such powers and perform such duties as determined by the CEO, with the advice and consent of the Board.”

The CEO’s complaint, filed April 8, 2024, asserted a single claim under the Massachusetts Wage Act against the Executive Chairman (and one other Board member, whom was later voluntarily dismissed). Following discovery, the Executive Chairman moved for summary judgment.

Controlling law. The Massachusetts Wage Act requires employers to compensate their employees for earned wages. As relevant here, persons liable under the Act include “[t]he president and treasurer of a corporation and any officers or agents having the management of such corporation.” Mass. Gen. Laws ch. 149, § 148. The Massachusetts Supreme Judicial Court has interpreted this language to impose de facto liability “on other officers or agents who may not hold these titles but whose significant management responsibilities over the corporation are similar to those performed by a corporate president or treasurer, particularly in regard to the control of finances or the payment of wages.” Segal v. Genitrix, LLC, 478 Mass. 551, 570, 87 N.E.3d 560 (2017).

Executive Chairman not personally liable. Even assuming that the Executive Chairman, as a Board member, was an officer of BSTX and that a Wage Act violation had occurred, the CEO did not proffer sufficient evidence for a jury to find that the Executive Chairman’s officer-agent powers gave him “over-all [sic] management of the financial and payroll function of the company.” Id. at 565. This was dispositive because such a finding is required for personal liability to attach.

The CEO cited, as evidence of the Executive Chairman’s control over company finances, that he had signed four promissory notes reflecting loans to help bail BSTX out of its economic troubles, and that the terms of these notes expressly declared that the borrowed funds could not be used to pay the CEO’s salary. This did not evince that the Executive Chairman exercised “control of finances or the payment of wages,” though, since the notes were signed in the Board’s name, following Board votes.

The CEO also argued that she “relied” on the Executive Chairman for financial information; thus, she “had to depend on him in assessing whether to terminate employees”amidst the company’s financial woes. But based on state court precedent, such alleged reliance was insufficient to advance the CEO’s cause, as it would otherwise convert essentially all investment and Board-borrowing activity into personal liability under the Wage Act. See id. at 566—68; see also Melendez v. OpenRounds, Inc., No. 2384CV00173-C, 2024 Mass. Super. LEXIS 57, at *16 (Mass. Super. Ct. Suffolk Cnty. June 5, 2024) (“[T]here is nothing especially remarkable about an investor or board member closely monitoring the company in which he or she is substantially invested, and providing informal counsel at the request of the president and CEO.”)

E-mails submitted by the CEO in support of her action instead depicted the Executive Chairman “staying within his lane” as a Board member by relaying information about the Board’s capital activity, rather than directing any action with respect to the payment of wages.

The other acts cited by the CEO either fell clearly within a corporate Board’s supervisory purview (such as the Executive Chairman’s requests for reporting and his transmission of that information to the Board) or did not implicate the company’s financial and payroll function (e.g., generally engaging with staff and third parties). Regardless of whether the Executive Chairman played an “active role” at BSTX, liability under the Massachusetts Wage Act does not flow from a Board member’s or officer’s “active” participation in a company.

“Even when viewed in the light most favorable to [the former CEO],” concluded the court, “the evidence permits no greater inference than that [the former Executive Chairman] was an involved officer and board member at BSTX. This is insufficient to sustain personal liability under the Wage Act.”

The case is No. 24-cv-11311-BEM.

Judge: Murphy, B.

Attorneys: Charles P. Kindregan (Beacon Law Group, LLC) for Lisa J. Fall. Brian E. Whiteley (Barclay Damon, LLP) for David M. Battan.

Cases: StateLawClaims WageHour CoverageLiability MassachusettsNews