compensation plan

As I mentioned in some of my prior posts, the Massachusetts Weekly Payment of Wages Act (“Wage Act”) poses many challenges to employers due, in part, to the vagueness of its terms, the strict liability it imposes on employers (and individuals having management of the company), and the threat of treble damages and attorneys’ fees.  One thing is clear, however: commissions are considered “wages” under the Wage Act if they are “definitely determinable” and have become “due and payable.”  While many in-house counsel and employers are aware of this, they mistakenly assume that their company can avoid violating the Wage Act if the company’s commission plan states that commissions are payable: (a) only if the employee is employed at the time the employer decides to pay them, or (b) only at the employer’s discretion.  As Prudential Insurance Company of America recently found out, however, simply including such a clause may not provide enough protection if the plan does not clearly address when commissions are “definitely determinable” and when they are “due and payable.”

Prudential had an elaborate nine-page document outlining its Regional Coordinators’ Sales Compensation Plan.  One of its long-time employees, Christopher McAleer, claimed that he was terminated … Keep reading