Mass. high court probes whether employer retention bonus counts as a "wage" under the Wage Act

BOSTON — The Massachusetts Supreme Judicial Court on Monday heard argument over whether a retention bonus paid to induce an employee to remain through specified dates should be treated as a “wage” under the Massachusetts Wage Act, potentially exposing employers to treble damages, attorney fees and criminal penalties if the bonus is not paid.

In oral argument, Raven Moslinger, counsel for the appellant Carlos Nunez, told the court: "The Wage Act starts with a very simple commandment and that is that employers are required to timely and completely pay employees their wages earned." Moslinger argued that where an employer offers money in exchange for specified services and an employee completes the required performance, that payment is an earned wage for purposes of the statute.

The dispute centers on a $15,000 retention payment offered in two installments of $7,500 due on Nov. 18, 2020, and Feb. 18, 2021, which the parties agree Mr. Nunez satisfied by remaining employed, keeping his schedule and remaining in "good performance standing." Moslinger emphasized the bonus was non‑discretionary as offered and said the record shows the employer conceded that Nunez met the conditions.

But Bronwyn Roberts, counsel for Precisely Software Inc. (formerly doing business as Syncsort Incorporated) and its CEO Joseph Rogers, told the court the nature of the offer controls. Roberts argued the Wage Act should not be read to impose the Act’s extraordinary remedies on contingent incentive payments and warned that classifying such payments as wages would subject routine employer incentive programs to criminal and civil exposure. "Employers should be encouraged to incentivize their employees and perform extra forms of compensation without the threat of criminal and civil penalties," Roberts told the court.

Justices questioned both sides about precedent and statutory construction. The court discussed Weems (the only prior Massachusetts case the parties identified as addressing bonuses under the Wage Act), Commonwealth v. Savage, Parker, Mui and other cases cited by counsel. Moslinger urged the justices to apply the statute's plain meaning and prior definitions the court has used for "wages" and "earned," noting the 1993 legislative expansion of wage remedies. Roberts countered that the Wage Act’s enumerated examples of wages and the court’s narrow readings in prior cases counsel against treating retention bonuses as wages.

A main point of contention for the justices was whether the existence of a contingent "good performance" requirement renders the bonus discretionary in the same sense at issue in Weems. One justice pressed the appellant’s counsel to view the matter as of the time the bonus was promised: "To determine whether this was a wage or not a wage, why wouldn't we look at just the conditions and the terms under which it was offered?" Raven Moslinger responded the statute’s plain language and the fact the contingency, once satisfied, yields a set monetary payment support treating it as an earned wage.

Roberts also warned of a potential consequence: employers could convert raises into contingent "retention" payments to avoid Wage Act exposure. The defense argued the Act should be strictly construed and noted that Massachusetts law already provides contractual remedies where bonuses are unpaid.

No decision was announced from the bench. The court frequently returned to two themes: whether the retention payment was truly discretionary at the time it was offered, and whether the Wage Act’s remedial scheme — including treble damages and possible individual liability — was intended to apply to the sort of incentive at issue. Both parties cited appellate precedent and differing lines of cases outside Massachusetts as persuasive authority.

The case drew amicus participation: Roberts acknowledged a brief filed by the New England Legal Foundation. The parties also debated whether a mistakenly paid severance or similar offset could reduce Wage Act damages, an issue the defense raised as a secondary question for the court.

The court’s questioning underscored the practical and policy stakes: if the justices adopt the appellant's framing, a fixed, contingent retention payment that the employee completes could be treated as a wage subject to the Wage Act; if they adopt the defense framing, many forms of contingent incentive pay would remain subject only to contract remedies. The justices did not indicate a timetable for a decision.

Background: The appellant, Carlos Nunez, alleges he completed the stated contingencies for the retention bonus but did not receive the payment; precisely that alleged nonpayment is the dispute before the court. Attorneys did not argue facts about why the payment was ultimately withheld beyond the contours of the retention agreement and whether the contingencies were met.

The Supreme Judicial Court continued its questioning before adjourning argument; a written opinion will determine the legal standard to apply to retention bonuses under the Wage Act.