Massachusetts High Court Holds That Retention Bonuses Fall Outside the Scope of the Wage Act

In Nunez v. Syncsort Incorporated (October 22, 2025), the Massachusetts Supreme Judicial Court held that retention bonuses are not “wages” for purposes of the Massachusetts Wage Act. As a result, employees may not bring Wage Act claims for non-payment or late payment of retention bonuses.

Background

In this case, the defendant company, which recently had merged with another company, entered into a retention bonus agreement with its senior director of finance. The stated purpose of the agreement was to provide an incentive for the employee to remain employed with the company during a “time of change and integration.” Under the agreement, the employee was eligible to earn a retention bonus of $15,000 in two equal installments on two separate “retention dates:” November 18, 2020 and February 18, 2021. To earn these bonus payments, the employee had to remain employed and in good standing through each retention date with no reductions in his regular work schedule.

The employee received the first retention bonus payment. In January 2021, however, the company informed him that his employment was going to be terminated on February 18, 2021 – the second retention date – as part of a reduction in force. He remained employed until then and the company paid him the second half of the retention bonus eight days later.

Even though the employee received the full amount of his retention bonus, he sued on the grounds that the payment was late. In his complaint, the employee claimed that the company violated the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148, by not paying him the second half of the retention bonus on his last day of employment. Under the Wage Act, an employer that involuntarily terminates an employee must pay the employee’s final wages on the date of termination. An employee who recovers on a claim for late payment of wages under the Wage Act is entitled to mandatory awards of treble damages, attorneys’ fees, costs, and interest.

The Court’s Holding

After the employee filed suit, the company moved to dismiss his Wage Act claim on the grounds that the retention bonus was not a “wage” for purposes of the statute. After the state district court agreed and dismissed his Wage Act claim, the case made its way to the Massachusetts Supreme Judicial Court on appeal.

The Massachusetts Supreme Judicial Court begin its analysis by noting that not all forms of compensation are “wages” for purposes of the Wage Act. Although the statute does not define the term “wages,” over the years Massachusetts courts have held that various kinds of contingent compensation (other than certain commissions, which are expressly referred to in the statute) do not constitute wages “where the contingency at issue imposes some requirement beyond the service or labor an employee provides in exchange for his or her compensation.”

In Nunez, the employee argued that the retention bonus constituted wages because it was nothing more than payment for labor or services. The Court rejected this argument, noting that the retention bonus payments were made in exchange for the employee’s agreement not to leave before the retention dates. Thus, the payments were “additional compensation,” above and beyond the employee’s salary, “contingent, or conditioned, on his continued employment to dates set by [the company] to which the [employee] agreed.” The payments also were conditioned on the employee remaining in good standing with no reductions in his regular work schedule. Thus, the payments were not made solely in exchange for the employee’s labor or services. Accordingly, the Supreme Judicial Court held that the retention bonus was not a wage for purposes of the Wage Act and affirmed the dismissal of the employee’s Wage Act claim.

What the Holding Means for Employers

The Massachusetts Wage Act is a strict liability statute, meaning that an employer’s intent is irrelevant in evaluating liability and damages. Because the statute provides for mandatory awards of treble damages, attorneys’ fees, costs, and interest to prevailing plaintiffs, it has become increasingly common for departing employees to assert claims under the Wage Act for late payment of wages.

As discussed in Nunez, however, not every payment to an employee constitutes “wages” that can give rise to a Wage Act claim. As the Supreme Judicial Court explained in Nunez, if a payment is “not made solely in exchange for the [employee]’s labor or services, but rather depended on additional contractual obligations,” it may fall outside the scope of the Wage Act.

The Nunez decision is an important reminder that, under the Wage Act, employees who are terminated must be paid their final wages on the date of termination, and employees who resign must be paid on the next applicable pay day. Given the significant penalties flowing from a late payment of wages, employers should consult with experienced wage and hour counsel when questions arise about their wage payment obligations.