BlogLine

Retention bonus does not constitute wages under the Massachusetts Wage Act 

10/28/25

By: Jennifer L. Markowski and Emily Mayfield

On October 22, 2025, the Supreme Judicial Court of Massachusetts (“SJC”) ruled that an employee’s agreed-to retention bonus did not constitute “wages” under the Wage Act, M.G.L. ch. 149, § 148. The Wage Act imposes severe penalties for noncompliance, including an award of reasonable attorney’s fees and automatic treble damages to a successful employee, as well as potential individual and even criminal liability. The decision, Nunez v. Syncsort Incorporated, provides important guidance to employers on an issue of first impression for the SJC.

The plaintiff was a former senior director of finance for a data management software company, Syncsort. A few months after accepting employment with Syncsort, plaintiff’s role was reduced to part-time with a commensurate reduction in salary. To incentivize plaintiff to continue his efforts and employment with Syncsort, Syncsort and the plaintiff entered into a retention bonus agreement that provided plaintiff would be eligible to earn a retention bonus in two equal tranches so long as: (1) he remained employed on the date of payment; (2) there was no reduction in his regular work schedule and (3) he remained in good standing. Plaintiff’s position was eliminated effective February 18, 2021 via a reduction in force. The date of his discharge was the day his second retention was to be paid if all conditions were met. Syncsort paid the bonus eight (8) days later.

The Wage Act requires that any employee discharged from employment shall be paid in full on the date of discharge. M.G.L. ch. 149, § 148. Not all compensation, however, constitutes “wages.” Where compensation is not considered “wages,” the specter of a Wage Act violation is not invoked and any claim for entitlement to such compensation is analyzed under contract principles.

Syncsort moved for summary judgment on the basis that the retention bonus was not a “wage,” relying largely on the contingent nature of the bonus. Aside from commission payments that have been definitely determined and become due and payable to an employee, the Wage Act does not expressly recognize other types of contingent compensation. Accordingly, Syncsort’s motion for summary judgment was allowed by the District Court and affirmed by the Appellate Division of the District Court Department. The SJC then granted plaintiff’s application for direct appellate review.

In affirming the decision, the SJC noted that the retention bonus payment was contingent on the three components set forth above: (1) the plaintiff’s continued employment; (2) no reduction in his work schedule; and (3) the plaintiff’s good standing. Importantly, the retention bonus was not in exchange for labor or services but rather was conditional on those three contractual provisions, making it compensation not within the purview of the Wage Act. 

For more information, please contact Jennifer L. Markowski at jennifer.markowski@fmglaw.com or your local FMG attorney. 

Information conveyed herein should not be construed as legal advice or represent any specific or binding policy or procedure of any organization. Information provided is for educational purposes only. These materials are written in a general format and not intended to be advice applicable to any specific circumstance. Legal opinions may vary when based on subtle factual distinctions. All rights reserved. No part of this presentation may be reproduced, published or posted without the written permission of Freeman Mathis & Gary, LLP.