Retention Bonuses Are Not Wages Under The Massachusetts Wage Act

In the October 22, 2025 decision of Nunez v. Syncsort Inc., 496 Mass. 706 (2025), the Massachusetts Supreme Judicial Court (“SJC”) held that retention bonuses pursuant to a retention agreement were not “wages” within the meaning of the Massachusetts Wage Act - M.G.L. c. 149, 148 (the “Wage Act”).

This case concerned the plaintiff's allegations arising from a retention agreement under which he was eligible to earn a retention bonus of $15,000 made in two equal tranches on the condition that he remain employed with the company on two separate retention dates and maintain his regular work schedule and good performance standing. As he remained employed through the first retention date, the employer paid the first portion of the bonus. Shortly thereafter, the employer informed the plaintiff that he would be laid off as part of a reduction in force and that his last day of work would be the same day as the second retention date. Ultimately, the employer paid the second portion of the retention bonus eight days after the last day of employment.

The plaintiff filed a lawsuit against the employer and its chief executive officer, claiming that payment of the second portion of the retention bonus eight days after his termination date violated the Wage Act. The relevant provision of the Act provides: “any employee discharged from such employment shall be paid in full on the day of his discharge . . .” M.G.L. c. 149, § 148. The trial court granted summary judgment in favor of the defendants and dismissed the Wage Act claim. The SJC affirmed summary judgment, ruling that retention bonuses are not considered wages within the meaning of the Wage Act. As a result, the payment of the bonus eight days after the plaintiff's discharge was not an untimely payment in violation of the Wage Act. The SJC followed Massachusetts precedent under which forms of contingent compensation, other than certain commissions as defined in the Wage Act, are not considered wages. For example, Massachusetts courts have previously held that discretionary stock options contingent on continued employment are not considered wages under the Act.

Had the retention bonuses been considered wages, the defendants would be held strictly liable for the late payment resulting in penalties, including but not limited to mandatory treble damages, attorneys' fees, and interest as well as potential personal civil liability against the president, treasurer, or any officers or agents having management of such corporation. M.G.L. c. 149, §§ 148, 150. 

Notwithstanding the employer's victory in this case, Massachusetts employers should proceed with caution in addressing employee wage issues, including in connection with termination, in order to avoid this potential liability under the Wage Act.

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