A commission is considered wages under the Massachusetts Wage Law when the commission is "definitely determined" and becomes "due and payable".  See M.G.L. c. 149, §148.  These two factors are best considered separately.

Definitely Determined

In Wiedmann v. The Bradford Group, Inc., 444 Mass. 698 (2005), the Supreme Judicial Court of Massachusetts (SJC) held that where the amount of commissions owed is "arithmetically determinable", the commission is "definitely determined" for purposes of the Wage Act. Wiedmann concerned the payment of commissions to an employee who worked pursuant to an oral contract.  During the litigation, a disagreement arose concerning how the Plaintiff's commissions were to be calculated.  Despite the disagreement, the SJC held that, under either calculation, the amount of the commission could be determined arithmetically.  Therefore, for purposes of the Wage Act, the commissions were wages and the protections of the Wage Act applied.

Due and Payable

A commission is due and payable when the contingency upon which the commission is based occurs.  For example, if a worker's job is to sell cosmetic products and his compensation agreement says that he is to be paid a commission upon each sale, the commission is due and payable as soon as a customer pays for the cosmetics.  Of course, this does not mean that the retail worker can just take cash out of the register to pay himself the commission.  The "due and payable" determination, like the "definitely determined" determination discussed above, simply means that the amount of the commission has become wages, and is afforded the same protections as if the amount had been earned by the hour.  The employer must still pay the commission in accordance with the law, must pay the worker all other wages due to him, and, so long as the worker meets the standards of the Independent Contractor Statute, must pay the worker on a W-2 and withhold the employer's share of payroll taxes and make other necessary employer contributions.

If you have questions about your commission compensation scheme or believe you have been improperly paid by your employer, give us a call today or fill out the form on the right.  A licensed Massachusetts attorney can help you understand your rights to commission payments, wages and other compensation.