The Supreme Judicial Court (“SJC”) recently concluded that retention bonuses are not “wages” for purposes of the Massachusetts Wage Act.
In Nunez v. Syncsort, the plaintiff had entered into an agreement with his employer (Syncsort Incorporated), whereby he would receive two retention bonus payments if he remained with Syncsort until certain fixed dates and if he remained in good performance standing. The plaintiff brought suit under the Wage Act when he was not paid the second retention bonus payment on the last day of his employment.
The SJC affirmed the lower court’s judgment dismissing the Wage Act claim, holding that the retention bonus payments were a form of “additional, contingent compensation outside the ambit of the Wage Act.” In the course of its decision, the SJC explained that the only contingent compensation recognized as a wage is commissions, and the SJC has not construed the term “wages” to encompass any other type of contingent compensation. The SJC noted that the retention bonus payments were conditioned on continued employment through a certain date and remaining in good performance standing. The payments were also “not made solely in exchange for the plaintiff’s labor or services” but served the purpose of incentivizing the plaintiff to remain with Syncsort during a period of corporate transition. This case is a reminder that, with the exception of commissions, Massachusetts courts will typically find that contingent compensation falls outside of the scope of the Wage Act.
