Massachusetts Court Expands Scope of Wage Act Regarding Payment of Commissions After Your Employment Ends

According to the Massachusetts Wage Act, a commission is a special payment and must be treated like a wage if it is tied to employee performance, definitely determinable, and due and payable. In other words, employers violate the Wage Act when they fail to make special payments that are tied to employee performance, definitely determinable, and due and payable. On February 11, 2020, the Massachusetts Supreme Judicial Court, in the case of Parker v. EnerNOC, provided some clarity regarding payment of commissions in the post-employment context, although the exact scope of the ruling is unclear.

EnernNOC is an energy company that helps businesses improve their efficiency. EnerNOC employed Francoise Parker to serve clients and paid her a salary plus commissions. On March 4, 2016, EnerNOC entered into a deal, brokered by Ms. Parker, with Eaton Industries worth a total of $20 million dollars, payable over five years. The sales contract had a clause allowing either party to opt-out of the contract within 30 days of its one-year anniversary.

Under EnerNOC’s commission plan, commissions on sales would be paid on the guaranteed portion of the contract (the first year of five) at the time of sale. The plan also provided that the commission on the remaining value of the sale (years 2-5) would be paid after the contract survived the opt-out date. The commission policy also stated that a salesperson’s eligibility for “any further [c]commissions” would cease upon the date of termination of employment “for any reason”.

On April 1, 2016 (one month after the Eaton deal closed), EnerNOC fired Ms. Parker after she complained about not receiving her full commission on the guaranteed portion of the Eaton contract (year 1). On April 22, 2016, EnerNOC paid Ms. Parker $100,222.21 as commission on the guaranteed portion of the contract. Ms. Parker filed suit, alleging (1) that she had been retaliated against in violation of the Wage Act, (2) that she was owed a greater commission on the guaranteed portion of the Eaton contract, and (3) that she was owed a separate commission on the remaining 4 years of the Eaton contract.

The jury sided with Ms. Parker and awarded her $25,063.34 on the guaranteed portion of the Eaton contract, $349,098.48 as amounts owed on years 2-5 of the Eaton contract, and damages for unlawful retaliation. The judge, however, agreed with EnerNOC and did not triple the $349,098.48, finding that it was not ‘due and payable’ as it ripened after Ms. Parker’s employment ended. Ms. Parker appealed that holding to the Supreme Judicial Court.

As you can tell from the title of this post, the Court sided with Ms. Parked and ordered that the $349,098.48 be tripled. According to the Court, that’s the case because:

But for the defendants' actions, the plaintiff would have been employed at EnerNOC when the opt-out period expired, and would have received the commission due under the true-up policy. Stated differently, as a result of the retaliation, the plaintiff did not receive wages she otherwise would have received. Wages lost as a result of retaliation are trebled under the Wage Act G.L. c. 149 §§148A, 150.

Read narrowly, this case stands for the rather unremarkable proposition that, under the Wage Act, commissions lost as a result of unlawful retaliation, that itself arises under the Wage Act, should be tripled. That’s consistent with First Circuit law regarding tripling lost backpay arising in connection with unlawful retaliation that violates the Massachusetts Wage Act. Footnote 13, however, seems to greatly extend the potential reach of this case beyond that context, stating:

In so concluding, we do not suggest that a period of continued employment is per se an inappropriate prerequisite upon which to condition a commission. However, such a contingency cannot be relied upon by an employer to create circumstances under which the contingency goes unfulfilled in order to deny a commission that otherwise would be due and payable to an employee.

You can read the full opinion here. It remains to be seen how this case will be applied. Will it be narrowly limited to the retaliation context, or broadly applied to all continuing-employment conditions?