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. | 45 severance pay is not included in the definition of wages and is not subject to laws governing the payment of wages. 5. Bonuses a. Discretionary Bonuses The Wage Act does not apply to discretionary bonuses or those that are subject to contingencies that do not occur. A bonus is “discretionary” if an employer is under no obligation to award it. 250 Thus, to be considered discretionary, the employer must have discretion to decide whether the employee receives a bonus, as well as the amount of any bonus received. Courts generally look to the language of the agreement or policy providing for the bonus to determine whether it is discretionary. 251 b. Earned Bonuses Courts have found that bonuses constitute wages when they are earned by an hourly employee, are calculated regularly, and are based on a fraction or a percentage of, for example, sales or bookings. 252 Bonuses that constitute wages typically bear strong similarities to commissions. severance may be recoverable under the Wage Act ) (cit ing, inter alia , Juergens , 2011 WL 1020856, at *2). Plus, the SJC’s recent citat ion to Prozinski seemingly forecloses any argument based on Juergens . Calixto , 481 Mass. at 162. 250 Weems , 453 Mass. at 153; Alfieri v. Merrimack Pharmaceuticals, Inc. , 99 Mass. App. Ct . 1119, 2021 WL 1344730, at *2 (Mass. App. Ct . Apr. 12, 2021) (award of compensat ion that rest s on discret ionary decisions by the Board “ is simply not contemplated by the act and falls out side of it s purview.”); Weiss v. DHL Express, Inc. , 718 F.3d 39, 48 (1st Cir. 2013) (dismissing Wage Act claim for unpaid bonus where bonus was cont ingent upon either an employee’s cont inued employment with good performance or a determinat ion by the employer that an employee was terminatedwithout good cause, and employer determined that the employee was terminatedwith good cause “ [b]ecause [the employer] was under no obligat ion to pay the bonus, [the employee] was not deprived of wages that he earned” under the Wage Act ); Lelio v. Marsh USA, Inc. , 2017 WL 3494214, at *10 (D. Mass. Aug. 14, 2017) (holding that employee’s long-termincent ivebonus was not a “wage” because it was “both wholly discret ionary and cont ingent on his cont inued employment”); Boesel v. Swaptree, Inc. , 31 Mass. L. Rpt r. 555, 2013 WL 7083258 (Mass. Super. Dec. 23, 2013) (interpret ing Weiss to stand for the proposit ion that “a bonus with the cont ingency of cont inued employment was not a ‘wage’” under the Wage Act ; and finding that an annual bonus was not a wage under the Wage Act because payment of the bonus was cont ingent upon the employee earning it by cont inuing employment for a full calendar year, and employee did not do so). But see Obourn v. Am. Well Corp. , 115 F. Supp. 3d 301, 309 (D. Ct . 2015) (reject ing Boesel ’s interpretation of Weiss and employer’s argument that a bonus cont ingent on continued employment was per se out side the scope of the Wage Act ) (interpreting and applyingMassachuset t s law). See also Young v. Fidelity Research & Analysis Co. , 87 Mass. App. Ct . 1123, 2015 WL 2401360, at *1 (Mass. App. Ct . May 21, 2015) (dismissing cont ract -based claims seeking to recover bonus payment s under an employment agreement where cont ract “unambiguously required [the employee] to be act ively employed” on certain dates, and the plaint iff was not ). 251 See, e.g. , Weems , 453 Mass. at 153; Boesel , 2013 WL 7083258, at *4 (“I look to the terms of the Agreement to determine whether the Annual Bonus is a ‘wage.’”). 252 Beaule v. M.S. Inserts & Fasteners Corp. , 17 Mass. L. Rpt r. 623, 2004 WL 1109796 (Mass. Super. Feb. 24, 2004). As explained in Sect ions V.A.3, bonuses are not includable in regular rate calculat ions under Massachuset t s law, regardless of whether they are discret ionary. However, as explained in Sect ion V.A.1-2, some bonuses are includable in regular rate calculat ions under federal law.