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What is the Difference Between a Commission and a Bonus?

Because commissions are considered wages under the Massachusetts Wage Act and bonuses are not, it is important to understand the difference.  You should also know that it does not matter what label your employer puts on an incentive payment- if it operates like a commission, it will be treated like a commission, even if it is called a bonus.

An incentive payment will be considered a commission under the law if it is based on an employee's individual contribution.  The most common example is sales closed- if your payment is based on the number of sales you close, as opposed to the performance of a group or division, that should be considered a commission.

This can also apply outside of sales.  People providing professional services may be compensated with a percentage of revenue received from invoicing clients for their services.  So long as this is calculated based on  individual contributions, it should be considered a commission.

A bonus, in contrast, is generally an amount- discretionary or guaranteed- that is tied to either a subjective performance appraisal, group or division wide performance, and/or company-wide revenue or profit.


Learn more here about commission pay under the Massachusetts Wage Act.

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  • Home
  • About
    • Slnlaw Offices
    • Fees and Payment
    • Privacy Policy
    • Publications and Interviews
  • Attorneys
    • Emily Smith-Lee >
      • 2018 Lawyer of the Year
    • Jenna Ordway
    • Rebecca Rogers
    • Andrew Silvia
    • Elijah Bresley
  • Reviews
  • Contact
  • Blog
  • Employment Law Solutions
    • Employment Law MA
    • Discrimination in the Workplace
    • Employment Termination
    • Sexual Harassment at Work >
      • Sexual Harassment in a Small Business
      • Sexual Harassment and Non Disclosure Agreements
      • Sexual Harassment and Remote Work
    • Wage and Hour Laws
    • Independent Contractor Law
    • Non Compete Agreements >
      • Are non competes enforceable
      • Massachusetts Non Compete Act
      • Pre 2018 Massachusetts Non Competes
    • Equal Pay Act
  • Estate Planning
    • Massachusetts Wills and Trusts
    • Why You Need an Estate Plan
    • Massachusetts Estate Tax
    • Inheritance Tax
    • How to Make an Estate Plan
  • Business Law Solutions
    • Small Business Law
    • Business Contract Basics
    • Civil Suit Defense
    • Legal Issues for Start Ups
    • Trademark Basics
    • How to Incorporate
    • Sale of Business
  • Legal FAQs
    • Estate Planning FAQs
    • Probate FAQs
    • Small Business FAQs
    • Wage Act FAQs
    • Commission Pay FAQs
    • Overtime FAQs
    • Independent Contractor FAQs
    • Non Compete FAQs
    • Employment Discrimination FAQs
    • Employment Termination FAQs
    • Severance Package FAQs
    • Medical Leave FAQs
    • Sexual Harassment FAQs
    • Massachusettts Unemployment FAQs
    • Employer FAQs
    • Civil Lawsuit FAQs