- within Employment and HR topic(s)
- with Senior Company Executives and HR
- in United States
- with readers working within the Media & Information industries
Key Takeaways:
- On October 22, 2025, the Massachusetts Supreme Judicial Court (SJC) ruled that retention bonuses conditioned on continued employment and good standing are not "wages" for purposes of the Massachusetts Wage Act (Wage Act).
- Moving forward, employers should make clear that any retention bonus is in addition to regular pay and conditioned on specific milestones or contingencies.
In its October 22, 2025 decision in Carlos Nunez v. Syncsort
Incorporated, SJC-13709 (2025), the Massachusetts Supreme
Judicial Court (SJC) ruled that retention bonuses conditioned on
continued employment and good standing are not "wages"
under the Massachusetts Wage Act. The ruling provides clarity to a
familiar area of dispute between employees and employers in
Massachusetts while also providing helpful guidance on how
Massachusetts courts will view other types of compensation under
the Wage Act.
In Nunez, the plaintiff and his employer entered into a
retention bonus agreement under which his employer agreed to pay
him a $15,000 bonus, payable in two equal installments, if he (i)
remained employed through two specific dates – November 18,
2020, and February 18, 2021; (ii) stayed in good performance
standing; and (iii) maintained his regular work schedule. Payment
of the first installment payment was not in dispute. On February
18, 2021, the company terminated the plaintiff's employment as
part of a reduction-in-force. Eight days later, the company paid
the plaintiff for the second installment of his retention bonus.
Thereafter, the plaintiff filed suit in Massachusetts District
Court, claiming that his former employer had violated the Wage Act
by failing to pay him the second retention bonus installment on his
last day of employment. After cross-motions for summary judgement,
the District Court found that the retention bonus at issue was not
"wages" under the Wage Act, ruled for the company, and
the Appellate Division affirmed the District Court's
ruling.
On appeal, the SJC upheld summary judgement for the company,
concluding that the Wage Act does not protect forms of compensation
that are contingent on conditions beyond an employee's typical
job performance. The Court found that retention bonuses, including
the defendant company's bonus payments to the plaintiff, depend
on additional contractual conditions and are more akin to
discretionary stock programs, which the Court had found previously
were not "wages" subject to the protections of the Wage
Act. In finding the retention bonus was not "wages," the
SJC rejected the plaintiff's contention that his second
retention bonus installment became "wages" because he
satisfied the contingencies, and thereby was due on his last day of
employment.
The SJC's decision provides clarity to an area of the law that
has been oft-litigated: when does a form of compensation become a
"wage" subject to the Wage Act's protections? Because
violations of the Wage Act come with treble damages awards and
mandatory attorney fee-shifting, employees often seek to bring the
form of compensation at issue within the statute's protections.
Nunez makes clear, however, that forms of compensation
that are subject to contingencies are not "wages," and
therefore not subject to the Wage Act. With the Nunez
decision in mind, employers should make clear that forms of
compensation outside of an employee's regular salary are in
addition to regular pay and are otherwise subject to contingencies
that fall outside of an employee's typical job performance,
such as identifying fixed retention dates, specifying conditions
for earning the compensation, and specifying outcomes for the
compensation upon different termination scenarios.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
