Non-payment-of-wage cases based on the private right of action embedded in the wage law continue to mark the Massachusetts legal landscape. In a US federal court, judge was allowed to move forward the case of an employee who claimed she was owed almost $60,000 in unpaid commissions.

The case began when the former sales employee claimed that she was owed the commissions as of her last day of work and that the company’s failure to pay her violated the payment of final wages provision of the Massachusetts wage-and-hour law. She also argued that the company’s failure to pay exposed the employer to the state’s treble damages penalty.

The company argued that her claim was not grounded in the law as her employment contract showed that the outstanding commissions had not been finalized yet (they were potentially subject to reductions), and therefore were not due and payable under the Wage Act.

The statute, MGL 149, §148, provides that “[t]his section shall apply, so far as apt, to the payment of commissions when the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due and payable to such employee, and commissions so determined and due such employees shall be subject to the provisions of section one hundred and fifty” (treble damages provision).

According to the company’s Sales Incentive Plan, sales employees earned commissions both when clients signed the contract and when the invoices were sent.

Based on that sales policy, the former employee alleged that those commissions were quantifiable and thus due and payable, that there were no unsatisfied contingencies that she had to complete, and that she was simply waiting for the invoices to be sent. The employer argued that the terms of the Incentive Plan (the potential for reduction noted above) conflict with the employee’s claims and that as a result, the former employee had failed to state a claim under the Wage Act.

The fact that the two parties presented such opposite takes on the unpaid wage statute ensured that the case would not be dismissed at this point. The judge noted that “[t]he allegations in the former employee’s complaint plausibly state a claim for a violation of the Wage Act because the commissions she is owed can be determined and were due and payable.”

At the same time, the judge recognized that the employer’s arguments may succeed at summary judgment when the facts clarify the application of the Incentive Plan to the commissions, as well as the nature of the employee’s outstanding obligations.

Cases like this and the accompanying article on the Sleepy’s case should remind employers to review the language of their policies or employment agreements governing the payment of a sales representative’s commissions, to minimize the risk of a legal challenge at the time of or following a separation from employment.

AIM members with questions about these or any other human resources issues may contact the AIM helpline at 1-800-470-6277.