Understanding Commission Payments at Termination: Your Rights under Massachusetts Wage Laws
Payment of Commissions at TerminationIn the intricate landscape of employment laws, it's crucial to grasp your entitlements under the Massachusetts Wage Laws, especially concerning commission payments.
Whether terminated or resigning, the law mandates that all final wages, including commissions, be paid promptly. For terminations, it's on the day of termination, and for resignations, in the subsequent regularly scheduled payroll. If these payments are owed and even a day late, the employee might be entitled to triple damages and reimbursement of legal fees for pursuing payment. Despite this legal obligation, many employers overlook or ignore commission payments owed to employees, leading to potential disputes. For this reason, it is important to know your rights. What Triggers the Right to Commission PayoutsHighlighting a critical aspect, only earned commissions are payable at termination. This underscores the importance of comprehending the specific triggers for earning commissions under an employer's policies, or under the law if there are no written policies.
When is a Commission "Earned"?Understanding the precise moment a commission is deemed "earned" is pivotal.
In the absence of a written policy, the default rule is when the customer agrees to the purchase, irrespective of subsequent delivery or payment delays. A written policy, if present, can set different triggers, including shippment of product, invoicing a customer, or even ultimate customer payment. Written policies require careful examination to ensure you have been paid the appropriate amount at termination. Residual Commissions and Earning TriggersThe dynamics of residual commissions, associated with recurring revenue, introduce a unique scenario. When clear policies explicitly tie earnings to each incoming payment, the commission structure is well-defined. However, in cases where there's an absence of a policy, a compelling argument arises: the commission can be considered "earned" at the closure of the deal. Importantly, this absence of restriction on residual payments could potentially open the door to the argument that the commission persists indefinitely, emphasizing the need for clarity in commission-related policies to avoid disputes and ensure fair compensation practices.
ConclusionUnderstanding your rights regarding commission payments, especially the crucial concept of "earned commissions," is vital. Navigate the complexities of Massachusetts employment laws, ensuring you receive your rightful earnings promptly and in compliance with the Wage Act.
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Meet Our Employment Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as a Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year. She has written a book on employment law: Rules of the Road, What You Need to Know About Employment Laws in Massachusetts, and helped thousands of clients on both the employee and employer side with issues relating to wage and hour laws, including overtime pay, late or unpaid wages or commissions, employee misclassification, and retaliation against employees asserting rights under the wage and hour laws.
Rebecca Rogers: Rebecca is a 2006 graduate of Boston College Law School, and has worked with slnlaw since 2013. She previously worked as an intellectual property litigation attorney for Fish & Richardson in Boston, Massachusetts, and clerked for the Massachusetts Supreme Judicial Court. Rebecca has helped clients with wage and hour disputes, including employee misclassification, late or unpaid wages or commissions, retaliation under the Wage Act, and advice to both employees and employers about wage and hour law compliance.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna has helped clients assess their rights under the wage and hour laws, including employee misclassification, untimely payment of final wages, late or unpaid commissions, retaliation, and advice to small business owners about wage and hour law compliance.
Elijah Bresley: Eli is a 2014 graduate of Seton Hall Law school, and has worked with slnlaw since 2020. He previously worked for a boutique employment law firm outside of Boston, and then for the Labor and Employment department of a large Boston firm. He also spent a year clerking for the judges of the Superior Court in Hartford, Connecticut. Eli has helped clients with wage and hour claims, including late or unpaid commissions, retaliation, employee misclassification, and overtime, and litigated these claims in state and federal courts. He also advises employers about employment policies and wage and hour compliance.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped clients with multiple wage and hour issues, including retaliation, misclassification, and late or unpaid wages or commissions, and litigated these claims in state and federal courts.
How We Can Help
Navigating the complexities of commission payments can be intricate. Trust our expertise to guide you through Massachusetts employment laws, offering insights to help you understand earning triggers, interpret policies, and ensure fair compensation practices. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
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