New Jersey: Commissions are Wages
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APPLIES TO All Employers with NJ Employees Earning Commission |
EFFECTIVE March 17, 2025 |
QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion:
In Musker v. Suuchi, Inc., the New Jersey Supreme Court ruled commissions are considered wages under the New Jersey Wage Payment Law (NJWPL). Here, an employee sold personal protective equipment (PPE) during the COVID-19 pandemic for the employer. The employee earned commission for PPE sales in addition to base salary. The employee generated approximately $34,448,900 in gross revenue from her PPE sales. Both the employee and employer then disagreed on the total value of the commissions owed. The employee then filed a claim that the unlawfully withheld commissions were owed to her as wages under the NJWPL.
In reaching its ruling, the Court overruled a previous lower court ruling that had classified commissions as supplementary incentives and not wages. Specifically, the NJWPL defines wages as “the direct monetary compensation for labor or services rendered by an employee, where the amount is determined on a time, task, piece, or commission basis excluding any form of supplementary incentives and bonuses which are calculated independently of regular wages and paid in addition thereto.” Now, the Court finds commissions have always met the definition of wages since “a commission directly compensates an employee for performing a service.” This ruling now means that commissions are subject to the NJWPL’s requirement of timely wage payments and the prohibition on withholding wages as illegal deductions.
Action Items
- Review and revise commission agreements with legal counsel.
- Update payroll processes for payment of commissions.
- Have appropriate personnel trained on the requirements.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase