Seyfarth Synopsis: In a February 12, 2020 decision, the Massachusetts Supreme Judicial Court held that future commissions a plaintiff would have earned but for her retaliatory termination were subject to trebling under the Massachusetts Wage Act. In doing so, the SJC overturned the Superior Court’s determination that future commissions that were neither due and payable nor definitely determined at the time of the plaintiff’s termination were not “lost wages” subject to treble damages under the Wage Act.
In Parker v. EnerNOC, the plaintiff, Francoise Parker, negotiated a deal with Eaton Industries worth $20 million over five years on behalf of her employer EnerNOC. The contract between Eaton and EnerNOC included a “termination for convenience” clause, which provided both parties a one-time option to terminate the contract within the thirty days following the first anniversary of the effective date. EnerNOC’s commission policy provided the potential to earn two separate commissions on contracts with such clauses. First, a commission would be paid on the guaranteed portion of the contract (i.e., the first full year of the contract). Second, a “true-up” commission would be paid based on the entire value of the contract, as long as the contract survived past the opt-out date. The commission policy also provided that “any further [c]ommissions” would cease upon the date of termination of employment “for any reason.” Approximately one month after Parker closed the Eaton deal, EnerNOC terminated her after she had complained about not receiving her full commission on the guaranteed portion of the deal.
Parker sued, alleging that she was owed commissions on the guaranteed portion of the contract and that she was fired in retaliation for complaining about her commission payment. A jury found EnerNOC liable on both non-payment of the commissions and for retaliation. The jury awarded the plaintiff approximately $25,000 as the difference between what she was owed and what she was paid on the guaranteed portion of the contract, and awarded her about $350,000 as the amount that would have been owed under the true-up policy, had she not been fired.
The Massachusetts Wage Act mandates treble damages for “lost wages and other benefits.” Commissions are considered wages under the Wage Act when they are “due and payable” and “definitely determined.” In Parker, the trial court judge reasoned that commissions are “lost wages” for purposes of treble damages under the Wage Act when they are “due and payable’ and . . . ‘definitely determined’ as of plaintiff[’]s last day of employment.” As a result, the Superior Court trebled the $25,000 as “lost wages,” but determined that the $350,000 true-up commission was not subject to trebling because it was neither definitely determined nor due and payable at the time of Parker’s termination (a year before the true-up commission would have been paid). Parker appealed that determination.
The SJC disagreed with the Superior Court’s analysis, noting that the Wage Act is silent as to when a commission must satisfy the due and payable and definitely determined requirements. Instead, the SJC clarified that just because a commission is not due and payable or definitely determined does not mean it is never a wage for purposes of the Wage Act. The SJC noted that the case law interpreting whether a commission is definitely determined and due and payable never contemplated whether unpaid commissions constitute “lost wages” resulting from retaliation. The SJC explained, “the clause defines when commissions become due to be paid promptly under the act; commissions that are not yet due to be paid may nonetheless constitute lost wages if the employer’s violations of the act prevent payment of those commissions.” The Court reasoned that, “but for the defendants’ actions,” Parker would have been employed at EnerNOC when the opt-out period expired and would have received the true-up commission. The SJC therefore held that wages lost as a result of retaliation, including future commissions such as the $350,000 true-up commission, are trebled under the Wage Act.
EnerNOC argued that a provision of its commission policy that required continuous employment through the expiration of the contract opt-out period meant that Parker had not satisfied the contingencies required in order to earn the true-up commission. The SJC dismissed this argument, holding that a policy that conditions payment on continued employment cannot relieve an employer from the obligation of paying a commission where the employer terminates its employee in retaliation for complaining about wage violations in the first place.
The SJC’s holding that commissions that were never due and payable nor definitely determined at the time of a plaintiff’s termination can be subject to treble damages is a new extension of the reach of the Wage Act’s treble damages provision. However, the SJC’s holding is limited in some respects. First, the SJC’s holding only applies to commissions that are lost due to an employer’s retaliation. The SJC’s decision does not change the fact that employers must pay commissions that are definitely determined and due and payable. The SJC was also careful to note that “had Eaton exercised its right to terminate the contract before the expiration of the opt-out period, the plaintiff would not have been entitled to the true-up commission, regardless of her employment status.” Thus, commissions that ultimately would not have been earned due to contingencies unrelated to any retaliation would not be recoverable as damages, let alone trebled.