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On Oct. 22, 2025, the Massachusetts Supreme Judicial Court issued its opinion in Nunez v. Syncsort, Inc., holding that a retention bonus does not constitute a "wage" under the Massachusetts Wage Act. This affirms a 2024 decision by the Appellate Division of the Massachusetts District Court.
Retention Bonus Agreement
The plaintiff entered into a retention agreement with his employer providing for a bonus if he remained employed in good standing through a specified date. Retention bonus agreements are typically utilized to help secure the services of an employee during periods of corporate uncertainty. The employer terminated plaintiff's employment at the end of the retention period, and paid him the agreed upon retention bonus eight days after his termination date. The employee sued, alleging that the employer violated the Wage Act by not paying the retention bonus on his termination date. The plaintiff sought mandatory triple damages under the Wage Act.
Retention Bonus Is Contingent Compensation
The sole issue before the Court was whether the bonus should be considered a "wage." The Wage Act requires employers to pay involuntarily terminated employees "all wages or salary earned" on the date of termination. If a bonus is not defined as a wage, the employer's obligations are governed by ordinary contract principles.
In reviewing the language of the Wage Act, the Court noted that the only category of contingent compensation recognized expressly in the statute is sales commissions. The Court cited previous Massachusetts appellate decisions that have rejected attempts to include within the Wage Act other forms of contingent compensation: namely, unused sick time, discretionary stock options, profit distributions, and severance pay. While this was a case of first impression for the Supreme Judicial Court, the Nunez opinion relied on Weiss v. DHL Express, Inc., 718 F.3d 39 (1st Cir. 2013), a federal court of appeals decision finding that a retention bonus did not meet the Massachusetts statutory definition of wages.
In addition to the contingent nature of the retention bonus, the Court noted that the bonus was payable not in exchange for labor or services, but in exchange for the plaintiff's agreement not to leave the company before the contractually specified date. As stated in Chief Justice Budd's concurring opinion, "the payments were not compensation for work completed, but for something else."
Implications
The Court's decision in Nunez places retention bonuses outside of the Massachusetts Wage Act. As such, retention bonuses are not required to be paid on the date of termination as wages are, and they are not subject to the Wage Act's triple damages provision. The decision may have broader application as well, as it provides guidance to consider both the contingent nature of the compensation in question, and whether it is paid in exchange for provision of labor or services in determining coverage under the Massachusetts Wage Act.
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