Massachusetts: Retention Bonuses Are Not “Wages” Under State Wage Act
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APPLIES TO Employers with Employees in MA |
EFFECTIVE October 22, 2025 |
QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion
On October 22, 2025, in Nunez v. Syncsort Incorporated, the Massachusetts Supreme Judicial Court held that retention bonuses are not considered “wages” under the Massachusetts Wage Act. The case involved a senior employee who received a retention bonus agreement contingent on remaining employed through specific dates and maintaining good standing. Although the employee ultimately received the full bonus, he sued under the Wage Act, claiming the second installment was paid late (eight days after his termination) and sought mandatory treble damages.
The Court unanimously affirmed the lower courts’ dismissal of the Wage Act claim, emphasizing that not all forms of compensation qualify as wages under the statute. While the Wage Act covers compensation paid solely in exchange for labor or services (e.g., salaries, hourly wages, and earned commissions), it does not extend to contingent payments like retention bonuses. The Court clarified that retention bonuses are additional compensation tied to an employee’s agreement to remain employed through a future date, and therefore fall outside the scope of the Wage Act’s protections.
While this decision provides some relief for employers, it emphasizes the importance of clearly documenting the terms of such bonuses, including the conditions for earning and payment. Employers are encouraged to consult with legal counsel when designing compensation agreements or evaluating potential liability exposure under the Wage Act.
Action Items
- Review compensation agreements, including retention bonuses, with legal counsel.
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