© 2025 Seyfarth Shaw LLP Massachusetts Wage & Hour Peculiarities, 2025 ed. | 3 the definition of wages does not include contributions to deferred compensation plans, deductions from pay for the purchase of stock if an employee requests the deductions, severance pay, discretionary bonuses, earned sick time or health insurance premiums. Additional details and distinctions regarding commissions, vacation pay, severance, bonuses, stock purchase plans and expense reimbursements are discussed below. 2. Commissions The term “commission” is commonly understood to refer to compensation owed to those in the business of selling goods, services, or real estate, set typically as a percentage of the sales price.4 Commissions are considered wages under the Massachusetts Wage Act if “the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due and payable to [an] employee.”5 Courts consider commissions to be “definitely determined” if the amount due can be precisely ascertained,6 and to be “due and payable” when any contingency that must occur for the employee to receive the commissions has occurred.7 If the amount of total commissions is “arithmetically determinable,” a dispute regarding the amount of deductions that should be made from the commissions will not prevent the commissions from being “definitely determinable.”8 The Massachusetts Appeals Court has noted that “[b]y its terms, the language of the wage act regarding commissions applies broadly, and is restricted in its application only by the requirements that the commissions be ‘definitely determined’ and ‘due and payable.’”9 One federal court, however, held that when an employee is terminated, commissions that are definitely determined but not yet due and payable under the applicable 4 Suominen v. Goodman Indus. Equities Mgmt. Grp., LLC, 78 Mass. App. Ct. 723, 738 (2011). Notwithstanding this basic definition, there has been substantial litigation over whether a payment is a commission covered by the Wage Act or not. “Courts have determined that a commission must be based on the sales or revenue generated by the individual employee, as distinguished from a payment based on a percentage of the business’s overall profits, which is not a commission.” Israel v. Voya Institutional Plan Servs., LLC, No. 15-CV-11914-ADB, 2017 WL 1026416, *4 (D. Mass. Mar. 16, 2017) (citing Feygina v. Hallmark Health Sys., Inc., No. MICV2011-03449, 2013 WL 3776929, *5 (Mass. Super. July 12, 2013) (“Where an employee is promised both a base salary and additional payments based ‘on the amount of revenue [s]he generated’ for her employer, those additional payments are ‘commissions’ subject to the Wage Act.”) and Suominen v. Goodman Indus. Equities Mgmt. Grp., LLC, 78 Mass. App. Ct. at 738 (profit sharing plan not commission under the Wage Act)). 5 M.G.L. ch. 149, § 148. For a discussion of commissions and calculation of regular rate of pay under Massachusetts and federal law, see Section IV.A. 6 Wiedmann v. The Bradford Group, Inc., 444 Mass. 698, 708 (2003) (commissions are “definitely determined” when they are “arithmetically determinable”); see also McAleer v. Prudential Ins. Co. of Am., 928 F. Supp. 2d 280, 287 (D. Mass. 2013) (a commission plan that affords an employer “[d]iscretion [to interpret or calculate commissions] prevents commissions from being definitely determined if the employer is under no obligation to award them”) (citing Wiedmann, 444 Mass. at 705). 7 Klauber v. VMware, Inc., 80 F.4th 1, 11 (1st Cir. 2023) (“[E]ven if a commission is susceptible to definite determination, it is not ‘due and payable’ until all ‘dependent contingencies have been met.’”) (citing Ellicott v. Am. Cap. Energy, Inc., 906 F.3d 164, 169 (1st Cir. 2018)); Sterling Research, Inc. v. Pietrobono, No. 02–40150, 2005 WL 3116758, *11 (D. Mass. Nov. 21, 2005); Micciche v. N.R.I. Data & Bus. Prod., Inc., No. 09–11661, 2011 WL 4479849, *6 (D. Mass. Sept. 27, 2011) (commission not due and payable because contingencies relating to entitlement had not occurred). 8 Wiedmann, 444 Mass. at 705. 9 Okerman v. VA Software Corp., 69 Mass. App. Ct. 771, 776 (2007); M.G.L. ch. 149, § 148; see also Rosnov v. Molloy, No. ESCV2007-0740, slip op. at 4-6 (Mass. Super. Apr. 20, 2009) (Kerns, J.) (finding referral fee that attorney agreed to pay associate for bringing in case constituted commission under the Wage Act).
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