Updates on the Massachusetts Wage Act

The Massachusetts Wage Act provides a powerful tool for employees who have not been paid their earned wages in a timely manner, by automatically providing for three times the damages of any amount improperly withheld or paid late. Crucially, when an employee leaves employment, the employer is obligated to promptly pay all earned wages, bonuses and commissions, including unused vacation time  

In recent months and years, Massachusetts courts have grappled with several key components of the Act, including defining what constitutes earned wages that are subject to the Act, and whether the law can be applied extraterritoriality to employees who work outside of Massachusetts. The Wage Act’s extraterritorial reach has become increasingly relevant in recent years with the rise of flexible working arrangements, including fully remote work. Here are some important recent developments in the law.  

 Defining Protected Wages 

The Wage Act does not provide a comprehensive definition of the term “wages.” However, as we have noted, certain categories of compensation, including unused sick time, discretionary stock option plans, profit distributions under stock agreements, deferred compensation plans, and severance pay do not qualify as “wages” under the Act.  

Last year in Nunez v. Syncsort, the SJC held that an unpaid retention bonus was a type of “contingent compensation” that is not subject to the Wage Act. There, the Court held that where a payment depends on a contingency that requires something more than the labor the employee performs for their job, that payment is not a “wage.” Since Nunez, Massachusetts appellate and trial courts have applied this distinction to clarify when bonuses and other incentive payments fall outside the Wage Act, and when a payment labeled a “bonus” may nevertheless qualify as wages.  

In Ruggere v. United Parcel Serv., Inc.,a federal trial court in Massachusetts analyzed whether defendant United Parcel Service, Inc. withheld payments that the plaintiffs had earned through the company’s employee referral program in violation of the Wage Act. The program compensated employees for referring new hires during peak season, provided that the referred employees remained employed for a specified period. Applying Nunez, Judge Kobick reasoned that the referral bonuses were “beyond the services or labor” that the plaintiffs provided, in part, because the contingencies depended on the actions of third-party referees, and could not be considered ordinary pay for the plaintiffs’ typical work.  

The Massachusetts Appeals Court likewise applied Nunez to hold that a discretionary incentive payment conditioned on continued employment was not a protected wage. In Sullivan v. PeoplesBank, the Massachusetts Appeals Court considered whether a performance-based variable compensation award constituted wages under the Wage Act. The plan calculated the award as a percentage of base salary based on individual, divisional, and bank performance, gave the bank’s compensation committee discretion to adjust or eliminate the award, and required employees to remain actively employed through the payment date in order to receive the award. Applying Nunez, the court held that the award was contingent compensation intended in part to encourage continued employment and was not a protected wage. 

However, one state District Court has identified a circumstance in which a payment labeled a “bonus” may qualify as wages: where the employer never defines or imposes any genuine contingency beyond the employee’s regular work. In Pres v. Sensys Gatso USA, Inc., the plaintiff accepted a written offer that provided for a performance bonus to be awarded upon “measured objectives,” but the employer never identified the objectives necessary to earn it. The court held that the employer could not rely on its own failure to set those conditions as a basis to withhold payment and concluded that the performance-based bonus constituted wages protected by the Wage Act. In distinguishing Pres from Nunez, the Pres court emphasized that for the quarterly bonuses in dispute to be “contingent,” and not subject to the Wage Act, the bonuses would need to be “dependent on or conditioned by something else.” However, without that “something else,” no contingency was created, and the bonuses were akin to ordinary payments to an employee in exchange for labor and services.  

International Application 

In recent years, plaintiffs who work outside Massachusetts—including abroad—have increasingly sought protection under the Wage Act. As we have previously discussed, Massachusetts employment laws can apply to employees working in other parts of the United States as long as Massachusetts has the most significant relationship with the plaintiff’s employment. 

Last year, on a motion for summary judgment in Serebrennikov v. Proxet Grp. LLC, a judge in the U.S. District Court for the District of Massachusetts (Judge Talwani) held that a plaintiff who worked primarily outside the United States could pursue a Wage Act claim based on that work. The court found that Massachusetts had the most significant relationship to the employment relationship, noting that the defendant was organized as a Massachusetts LLC, identified a Massachusetts address on IRS forms issued to the plaintiff over several years, and paid the plaintiff from Massachusetts. The plaintiff also reported to a Massachusetts-based management team and provided operational services to the Massachusetts company. 

However, in August 2026 in Kalm v. Exergen, another federal district court (Judge Saylor) held that the Wage Act does not apply to work performed outside of the United States. The plaintiff in Kalm worked from his home in Chile, other countries throughout Latin America and the Caribbean, and occasionally, in the United States.  

The Kalm court relied on Lockley v. Studentcity.com, Inc., in which the Massachusetts Superior Court reasoned that “Massachusetts does not have the power to legislate the terms and conditions of employment that occurs exclusively within a foreign country.” In Lockley, the plaintiffs alleged that, while working in the Bahamas, the defendant required them to work more than 40 hours per week while paying them a daily stipend of only $28.57. The Kalm court distinguished choice-of-law principles that may permit Massachusetts law to govern conduct occurring in another state from the constitutional limitations on a state’s authority to regulate conduct within a foreign sovereign nation, emphasizing that authority over foreign affairs rests exclusively with the federal government. The court also noted that the Fair Labor Standards Act expressly excludes “any employee whose services during the workweek are performed in a workplace within a foreign country.” 

Despite its view that the Wage Act did not apply to work performed outside the United States, the Kalm court found that the plaintiff had plausibly alleged that some of the plaintiff’s unpaid commissions were earned because of work performed in the United States. Therefore, the court held that the Wage Act likely applied to plaintiff’s work within the United States given that Massachusetts had a more significant relationship to the parties’ relationship than any other state.   

Legislative Developments 

Since the Massachusetts Supreme Judicial Court’s decision in Reuter v. City of Methuen, which held that all Wage Act violations trigger automatic treble damages, regardless of whether the employer is able to remedy the violation prior to suit, employers’ counsel has advocated for the legislature to adopt a “good-faith defense” to treble damages. However, bills in the Massachusetts House and Senate proposing such a defense have stalled. Although H. 2163 and S. 1332 were referred to the Ways and Means committees in their respective houses in early 2026, neither bill has advanced any further in the legislative process.   

These bills would significantly weaken the Wage Act and undermine the financial security it provides to workers. Employees depend on timely wages to meet immediate financial obligations, while employers control the payroll systems and payment decisions that determine whether those wages arrive. Mandatory treble damages are therefore essential: they deter employers from withholding earned wages and ensure that nonpayment is more costly than compliance. H. 2163 would further burden employees by requiring employees to provide a written demand before the employer’s 15-day cure period begins. That proposal undermines the Act by forcing employees—often with limited resources—to take additional steps merely to recover wages they have already earned. The risk of nonpayment should remain with the employer that violated the law, not the employee who performed the work, to incentivize companies to promptly pay wages 

Although broader efforts to weaken the Wage Act have stalled, the Legislature has enacted a narrower response to Reuter: Section 113, signed into law on July 4, 2025, which retroactively shields certain nonprofit higher-education and health-care employers from monthly-pay-frequency claims filed between July 1, 2024, and September 30, 2028. That targeted carveout is now being tested before the SJC in Martin v. Amherst College and Oettinger v. Massachusetts General Physicians’ Organization, both of which challenge Section 113’s constitutionality.  

In Martin and Oettinger the plaintiffs challenge Section 113’s constitutionality on the grounds that it violates Article 10 of the Declaration of Rights to the Massachusetts Constitution by selectively exempting favored employers from the generally applicable Wage Act, violates state and federal due process protections by retroactively extinguishing pending claims, and violates Article 11 of the Massachusetts Declaration of Rights by eliminating any remedy for accrued Wage Act violations.  

Conclusion 

The recent decisions and legislative developments underscore the breadth and the continuing importance of the Wage Act. Courts continue to wrestle with how far the Act reaches and what compensation it protects, while the Legislature has already shown a willingness to narrow those protections and even try to strip employees of claims they already have. The Wage Act is a critical protection for employees, and efforts to narrow or weaken it should be challenged. 

If your employer is withholding your wages, or you have another workplace legal concern, contact our employment attorneys at (617) 742-6020. 

 

* Our blogs are written by the firm’s attorneys, without the use of AI or ghostwriters