On February 20, 2020, the Massachusetts Supreme Judicial Court issued an opinion vindicating the rights of commissioned salespeople and striking a blow against employers who wrongfully detain wages. In Parker v. EnerNOC, Inc. (SJC-12703) the Court held that an employer cannot hold back a commission that is owed solely based on a commission agreement that requires “continuous employment.” This is particularly true when the employer causes the termination from employment that made the employee ineligible for the commission under the employer’s plan.
Under Massachusetts law, sales commissions are not owed until certain contingencies have occurred – for example, many plans state the commission is due and payable after the sale is finalized and product delivered. Additionally, many commission plans defer the period of time that an otherwise earned commission is to be paid out. For instance, even though a salesperson may have fulfilled all requirements for earning the commission, the employer makes the commission payout due sixty days after the sale and requires the salesperson to be employed on the date that the commission is scheduled to be paid out. Under this scenario, a salesperson who has completed a sale but who separates from employment before receiving his or her commission would not be entitled to the commission under the employer’s plan. Due to the SJC’s ruling in Parker, employers withhold such payments at their own hazard. Employers are required to pay commissions that have been earned (but not yet paid) regardless of whether they remain employed on the payout date, and such payments are “wages” under the Massachusetts Wage Act and subject to triple damages and reimbursement for attorney’s fees.
The holding in Parker can be used to argue that other forms of remuneration such as bonuses that have been earned but not paid out as of the date of an employee’s separation.