September 18, 2020

Volume X, Number 262

September 18, 2020

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SJC Finds Commissions Lost Due to Retaliation Are Subject to Trebling

In a February 12, 2020 decision, Parker v. EnerNOC, Inc., SJC-12703, the Massachusetts Supreme Judicial Court held that the full commission which would have been due to an employee had she not been retaliated against and terminated is a “lost wage” eligible to be trebled under the Wage Act.

While employed by EnerNOC, the plaintiff earned commissions based on her sales. The multi-year contract resulting from the sale at issue in the case included a provision by which either party could opt out after the first year.  The commission on this sale included two components: the first was a payment on the guaranteed first year of the contract; the second component would be earned once the contract survived the opt-out date. EnerNOC’s commission policy stated that a salesperson’s eligibility for commissions ceased if they were terminated for any reason. The plaintiff was terminated prior to the contract surviving the opt-out date.

In May 2018, a jury found EnerNOC liable for multiple claims, including a claim under the Wage Act for retaliatory discharge after the plaintiff complained about the amount of commission paid to her on the guaranteed portion of the contract. The jury awarded the plaintiff the full amount of her commission on the guaranteed portion of the contract, as well as the commission she would have earned had she been employed when the contract survived the opt-out date. The trial judge did not treble the latter component of commission, reasoning that the unpaid commission was not due and payable at the time the plaintiff was terminated.

The SJC found that the trial judge erred in not trebling the second component of commission. In doing so, the Court noted prior decisions holding that the term “wages” under the Wage Act encompasses commissions when (i) the amount of the commission has been definitely determined and (ii) the commission has become due and payable. In reviewing those decisions and the text of the Wage Act, however, the Court determined that failure to pay commissions that meet those conditions is merely “one way” to violate the Act.  Commissions may still constitute “wages” under the Act even if both conditions are not met where the employer’s violation of the Act prevents payment of such commissions. The Court held that the second component of plaintiff’s commission was still a “lost wage,” even though it was not due and payable to her while she was employed, because she was prevented from receiving the commission by EnerNOC’s retaliation. Accordingly, the SJC ordered both components of the plaintiff’s commission to be trebled.

The decision has significant implications for Massachusetts employers with commission-based employees: if an employee is denied a commission he or she otherwise would have earned as the result of an employer’s retaliatory action, the employer may be liable for treble the amount of those commissions. Further, a policy that requires employees to be employed through the time the commission becomes due and payable cannot insulate an employer who engages in retaliatory termination.  Though the Court’s decision appears to be confined to commissions lost as a result of retaliatory discharge in violation of the Wage Act, future plaintiffs may attempt to extend the Court’s reasoning in support of treble damage claims for unpaid commissions lost due to other forms of wrongful termination.

© 2020 Proskauer Rose LLP. National Law Review, Volume X, Number 58

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About this Author

Scott Faust, Labor Attorney, Proskauer Rose Law Firm
Partner

Scott A. Faust is a Partner in the Labor & Employment Law Department, co-head of the Strategic Corporate Planning Group and a member of the Labor-Management Relations Group, resident in the Boston office. He focuses his practice on all aspects of labor and employment law, and regularly handles collective bargaining negotiations, arbitration, mediation and litigation of labor and employment disputes on behalf of his clients.

617.526.9650
Heylee S. Bernstein Associate Proskauer Labor & Employment Employment Counseling & Training
Associate

Heylee Bernstein is an associate in the Labor & Employment Law Department and a member of the Employment Counseling & Training Group. Heylee earned her J.D. cum laude from Harvard Law School, where she served as the President of the Committee on Sports and Entertainment Law. In addition, she was a Senior Article Editor for the Journal of Sports and Entertainment Law, and served as a Research Assistant in the Labor & Worklife Program. 

1-617-526-9621