Massachusetts SJC Rules Retention Bonuses Are Not “Wages” Under the Wage Act

On October 22, 2025, the Supreme Judicial Court issued a decision in Nunez v. Syncsort Incorporated (SJC-13709, Oct. 22, 2025), in which it held that retention bonuses are not “wages” under the Massachusetts Wage Act.  

The plaintiff, a senior finance director, entered into a retention bonus agreement providing two retention bonuses if he remained employed through specified dates and remained in good standing. Ultimately, the company terminated the plaintiff during a reduction in force and paid him the final retention bonus eight days after his termination. Nonetheless, the employee sued, alleging that the company violated the Wage Act by not paying the retention bonus on his termination date.  He sought mandatory triple damages under the Wage Act.

The SJC, in a unanimous decision, affirmed the trial and appellate court decisions that the bonus was contingent compensation and therefore not a wage under the statute. In doing so, the SJC emphasized that not all forms of compensation are “wages” under the Wage Act and that the statute applies to compensation paid solely in exchange for labor or services, such as salaries, hourly pay, and earned commissions. By contrast, the SJC held that a retention bonus is an incentive to remain employed through a future date—it is “additional, contingent compensation” outside the scope of the Wage Act. Chief Justice Budd, concurring, explained that the decisive factor is the function of the payment: compensation for ordinary work is a wage, but compensation for something more—such as agreeing to stay through a specific date—is not. Because the bonus was conditioned on continued employment and good standing, it was not a “wage” that had to be paid on the employee’s last day.

This decision is a small reprieve for employers facing the Wage Act’s severe consequences of automatic treble damages.  It is also a reminder that employers offering retention or incentive bonuses should clearly document the contingent nature of the bonus—e.g., that payment is earned only upon continued employment through a fixed date and good standing in the interim.

While this decision places retention and stay bonuses firmly outside the scope of the Wage Act, earned wages, including salary, vacation pay, and commissions, are still subject to the strict timely pay requirements of the Wage Act, which mandates automatic treble damages for even technical violations.