Takeaways
- In Nunez v. Syncsort Inc., the court determined a bonus conditioned on remaining employed until a specified date does not fall within the definition of a “wage” under the Massachusetts Wage Act requiring immediate payment upon discharge.
- Unlike wages for labor or services performed, bonuses operate as conditional incentives intended to encourage employees to remain.
- Employers structuring incentive programs need to consider precise contractual language in their retention bonus agreements.
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Article
Employers offering retention bonuses gained welcome clarity when the Massachusetts Supreme Judicial Court, the state’s highest court, held in Nunez v. Syncsort Inc., 496 Mass. 706 (Oct. 22, 2025), that a bonus conditioned on remaining employed until a specified date does not fall within the definition of a “wage” under the Massachusetts Wage Act.
Background
Carlos Nunez agreed to a retention arrangement after his position was reduced to part-time. Under that agreement, he would receive two payments of $7,500 if he continued working through Nov. 18, 2020, and Feb. 18, 2021, while maintaining full hours and good standing. Nunez satisfied these conditions, and the employer issued the second payment eight days after his termination. He asserted a claim under the Massachusetts Wage Act, which requires immediate payment of earned wages upon discharge.
Court’s Analysis, Holding
The court affirmed judgment for the employer, concluding that retention bonuses do not constitute wages because they are not compensation strictly for labor or services performed. Rather, retention bonuses operate as conditional incentives intended to encourage employees to remain during periods of uncertainty, supplementing regular pay.
The court stressed that the Wage Act applies to salary, hourly compensation, vacation and holiday pay, and commissions that are “definitely determined” and “due and payable.” Commissions are the only contingent form expressly included. Other conditional benefits (such as discretionary bonuses, stock options, and severance) have consistently been excluded. Following the court’s decision, retention bonuses now fall within that category.
Chief Justice Kimberly Budd, in a concurring opinion, emphasized that the distinction lies in purpose: Wages compensate routine work, whereas retention bonuses reward the commitment to remain.
Implications for Employers
Retention and stay bonuses are governed by contract principles, rather than statutory wage protections. Violations of the Wage Act have severe consequences.
To minimize risks in retention bonus agreements, employers should:
- Draft agreements that clearly state the contingent nature of retention bonuses;
- Specify retention dates and performance criteria; and
- Avoid language suggesting the bonus is earned solely for services rendered.
Retention bonuses are not subject to the Wage Act, but earned wages such as salary, vacation pay, and commissions remain subject to strict payment requirements. The Nunez decision provides clarity for Massachusetts private employers structuring incentive programs by highlighting the need for precise contractual language in their retention bonus agreements.
