Client Advisory

The Massachusetts Supreme Judicial Court affirmed dismissal of a plaintiff’s claim under Mass. Gen. Laws Ann. Ch. 149, Section 148 (“MA Wage Act”), holding that a retention bonus is not considered “wages” under the MA Wage Act. Associate Justice Wolohojian authored the October 22, 2025 decision, which was joined by all Justices except Chief Justice Budd who authored a separate concurring opinion.

In Nunez v Syncsort Inc., 496 Mass 706 [2025] The Plaintiff and Defendant entered into an agreement for retention bonuses to be paid to the Plaintiff on two separate dates, provided that he was still employed by those dates and in good standing without any reduction in his work schedule. Plaintiff was actually paid both bonuses, but he was terminated on the same date that the second bonus was to be paid, and the bonus was paid eight days later. Under the MA Wage Act, wages due are to be paid on the date of termination. Plaintiff sued his employer under the theory that the MA Wage Act was violated in that he should have received the second bonus, which he argued is “wages,” on the date he was terminated.

The Court noted that the MA Wage Act does not specifically define “wages,” and the only “contingent compensation” expressly recognized in the MA Wage Act is commissions under certain circumstances. The Court further noted that prior attempts to construe other forms of contingent compensation as “wages” have failed primarily due to those types of compensation being contingent upon something other than the services or labor the employee is expected to provide. For example, accrued, unused sick time was held not to be wages because it was contingent upon a departing employee having worked a certain length of time and having not been terminated for cause. Similarly, discretionary stock option plans and/or distributions were held not to be wages because they were either contingent upon the length of time the employee remained with the company, or upon revenue.

The Court characterized the retention bonus at issue as, “additional compensation that was contingent, or conditioned, on [plaintiff’s] continued employment to dates set by [defendant] to which the plaintiff agreed.” Accordingly, the Court held that, “[t]he bonus payments were not made solely in exchange for the plaintiff’s labor or services[,]” and were therefore not “wages” contemplated by the MA Wage Act.

The general rule arising out of this decision can be found in the Court’s conclusion: payments which “[are] not made solely in exchange for the [employee’s] labor or services, but rather depend[ant] on additional contractual conditions, [are] additional contingent compensation outside the scope of the Wage Act[,]” although this may be further informed by the Chief Justice’s concurring opinion.

Chief Justice Budd’s concurring opinion seeks to, “…emphasize that the reason that the retention bonus does not qualify as a wage under the Wage Act is that it was offered in addition to the plaintiff’s regular pay, in exchange for something more than his regular work.” The concurring opinion discusses the proposition that, “…the mere existence of a contingency is not a reliable way to determine whether a payment is a wage,” hypothesizing that, “…if an employee could collect her weekly paycheck only by wearing a red shirt on payday, presumably the court would conclude that, notwithstanding the contingency, the payments would count as wages…” The Chief Justice’s conclusion is that, “[c]ontingencies matter to the analysis only to the extent that they inform the function of the underlying payment.”