Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

© 2022 Seyfarth Shaw LLP Massachusetts Wage & Hour Peculiarities, 2022 ed. | 41 holiday and vacation pay due under an oral or written agreement. Otherwise, it does not explicitly define the term “wages.” Interpreting the statute, Massachusetts courts have held that 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, or health insurance premiums. Additional details regarding severance, bonuses, and stock purchase plans are found in Sections III.B.4-6. 2. Commissions The law governing the timely payment of wages includes commissions in the definition of wages, provided that “the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due and payable to [an] employee.” 222 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. 223 Courts consider commissions to be “definitely determined” if the amount due can be precisely ascertained, and to be “due and payable” when any contingency that must occur for the employee to receive the commissions has occurred. 224 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.” 225 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.’” 226 3. Vacation Pay Neither Massachusetts nor federal law requires employers to provide paid vacation benefits to employees. When employers do provide paid vacation, however, employers must treat accrued 222 M.G.L. ch. 149, § 148. For a discussion of commissions and calculat ion of regular rate of pay under Massachuset t s and federal law, see Sect ion V.A. 223 Suominen v. Goodman Indus. Equities Mgmt. Grp., LLC , 78 Mass. App. Ct . 723, 738 (2011). Notwithstanding this basic definit ion, there has been substant ial lit igat ion over whether a payment is a commission covered by the Wage Act or not . 224 Wiedmann v. The Bradford Group, Inc. , 444 Mass. 698, 708 (2003) (“There is no dispute concerning the total from which deduct ions would be taken or about the other applicable formulas and deduct ions, thus making the amount owed the plaint iff arithmet ically 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]iscret ion [to interpret or calculate commissions] prevents commissions from being definitely determined if the employer is under no obligat ion to award them”; finding commissions to be “definitely determined” where governing commission plan afforded an employer complete discret ion for interpretation and calculat ion of commissions, because the commission payment s themselves were not discret ionary) (cit ing Wiedmann , 444 Mass. at 705). One federal court recent ly held that when an employee is terminated, commissions that are definitely determined but not yet due and payable under the applicable commission plan solely because the plan requires a wait ing period before payment , are wages that must be paid upon terminat ion. Israel v. Voya Institutional Plan Servs., LLC , Civ. No. 15-cv-11914-ADB, 2017 WL 1026416, at *7 (D. Mass. Mar. 16, 2017). 225 Wiedmann , 444 Mass. at 705. 226 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. Ct . Apr. 20, 2009) (Kerns, J.) (finding referral fee that at torney agreed to pay associate for bringing in case const ituted commission under the Wage Act ).