Unpaid Commissions in Massachusetts

In Massachusetts wages are regulated by the Wage Act, which defines “wages” broadly to include salary, hourly pay, bonuses, commissions, vacation, and other forms of “pay”. Thus, a failure to pay a commission, is analogous to the failure to pay any other wage under the Act — triggering civil liability exposure, triple damages, and attorney’s fees.

Commissions are an area of confusion for a lot of employees/employers. The courts in Massachusetts have recently determined that the Wage Act applies to all commissions as long as they are “due and payable” and “definitely determined”. A commission is “definitely determined” when it is can be arithmetically calculated (The SJC in Wiedmann v. Bradford Group, Inc. 444 Mass. 698 (2005) established this standard). In order for the commission to be calculable, all the mathematical factors needed to calculate the commission must be known or knowable.

Companies can set the conditions in which a commission is due and payable. An employer will usually put this in writing and make sure all factors are included as well as the time of payment. However, if an employer is silent on the terms of the commissions, common actions and company practices will be used to determine when commissions are due and payable.

In contrast, certain bonuses, are generally not considered wages for the purposes of finding employer’s liable in nonpayment of such compensation as was decided in Suominen v. Goodman Indus. Equities Mgmt. Group, LLC, 78 Mass. App. Ct. 723, (2011) The court reasoned that since a bonus is a stake in the company profits that the Wage Act does not provide protection for this incentive based pay. However, this is a hotly contested issue and the outcome could quite possible shift on a case-by-case basis.