The Massachusetts Appellate Division of the District Court – North District recently issued a decision regarding whether retention bonuses constitute wages under the Massachusetts Wage Act, G.L. c. 149, § 148 (the “Wage Act”). In the matter of Nunez v. Syncsort Incorporated, NO. 23-ADCV-63NO, the court ruled that retention bonuses are not wages under the Wage Act and not subject to strict liability or treble damages under the Wage Act for failure to be timely paid.
Background
The defendant in this dispute formerly employed the plaintiff. The defendant promised to pay a retention bonus to the plaintiff, provided that the plaintiff remained employed with the defendant through the payment dates of the bonus unless the defendant terminated the plaintiff’s employment without cause before any such date. The defendant terminated the plaintiff’s employment due to a reduction in the workforce prior to the second payment date, but the defendant did not pay the plaintiff the second installment of the retention bonus on the date of the plaintiff’s termination of employment by the defendant without cause. However, the defendant paid the plaintiff the second installment, in the month following his termination, after he filed a complaint against the defendant under the Wage Act for the defendant’s failure to pay this amount.
Despite the defendant’s ultimate payment of the second installment, the plaintiff claimed that the defendant unlawfully failed to pay him this amount in a timely manner in violation of the Wage Act. The dispute between the parties in this matter hinged upon whether a retention bonus constituted wages under the Wage Act and, therefore, subject to the Wage Act’s requirement that wages be paid in a timely manner.
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