Understanding Unpaid Commissions in Massachusetts
In Massachusetts, commissions and bonuses are often a significant part of an employee’s compensation package. However, disputes can arise when an employee is terminated, and the employer does not pay these earned amounts. Understanding your legal rights is crucial to ensuring you receive the compensation you deserve.
Commissions: Commissions are payments based on sales or other measurable performance metrics. In Massachusetts, once an employee earns a commission, it is a wage, and the employer must pay it according to the employment contract or company policy.
Bonuses: Bonuses can be discretionary or non-discretionary. Discretionary bonuses are awarded at the employer’s discretion and are typically not considered wages. Non-discretionary bonuses, however, are promised to employees based on performance or other measurable criteria and are part of an employee’s wages.
Massachusetts Laws and Regulations
Massachusetts General Laws Chapter 149, Section 148, commonly known as the Wage Act, governs the payment of wages, including bonuses and commissions. The Wage Act requires employers to pay employees all wages earned, including non-discretionary bonuses and commissions, on time. Upon termination, all earned wages must be paid on the day of termination, if the employer initiates the termination, or by the next regular payday, if the employee resigns.
Failure to pay earned bonuses and commissions results in severe penalties for the employer, including treble damages (three times the owed amount), attorney’s fees, and other costs.
Typical Scenario: Unpaid Bonuses and Commissions
Example Case
Scenario: Sarah worked as a sales manager for a company in Massachusetts. Her compensation package included a base salary and a commission structure based on her sales performance. Sarah also had a non-discretionary bonus agreement based on meeting certain quarterly targets. After she achieved her targets, thus earning significant commissions and bonuses, the employer abruptly terminated Sarah.
Despite her efforts, Sarah did not receive her earned commissions and bonuses upon termination. The company argued that these payments were not due because her employment ended before the payment date outlined in the company’s policy.
Legal Implications: According to Massachusetts law, Sarah is entitled to all earned wages, including her non-discretionary bonuses and commissions, regardless of the company’s internal policies. Since she met the criteria for the bonuses and earned her commissions through her sales performance, these amounts are wages under the Wage Act. By not paying these wages timely, the company incurred the penalties set out in the Wage Act.
How to Address Unpaid Bonuses and Commissions
Disputes over unpaid bonuses and commissions can be complex and stressful. If you believe you are owed unpaid bonuses or commissions, you need to understand your rights and take the appropriate legal steps. Our experienced employment law attorneys are here to help you fight for the compensation you deserve. Contact us today for a case evaluation and to discuss your case in further detail. Let us help you secure your rightful earnings and hold your employer accountable.
