On March 28, 2024, the Massachusetts Supreme Judicial Court (“SJC”) issued Sutton v. Jordan’s Furniture, Inc SJC No – 13382 (2024) (Jordan’s), providing further guidance on the application of the Massachusetts Wage Act to sales commission plans. In particular, the Court evaluated whether premium pay, that is enhanced pay for overtime or Sunday work (now repealed), was due to inside sales employees of Jordan’s who worked on 100% commissions and were paid on “draw,” or advance/loan against future commissions. In short, the SJC held that Jordan’s policy of including employees’ Sunday and overtime in their “draws” against their future commissions violates Massachusetts law.
The Court found that Jordan’s plan correctly tracked premium pay separately yet improperly deducted such pay from commissions. As such, Jordan’s commission plan violated the overtime statute, G.L. c. 151 § 1A, the now-repealed Sunday Pay Statute, G.L.c. 136, § 6 (50), and the Massachusetts Wage Act, G.L. 149, § 148, by including the sales employees’ premium pay earned for overtime (time worked over forty hours in a week), or their Sunday work, as part of their sales employees recoverable draw plan. The Court concluded that this system deprived Jordan’s inside sales employees from the benefit of premium pay.
In a recoverable draw plan like Jordan’s, a commission-based sales employee is paid an advance or loan on the employee’s future commissions. The weekly “draw” amount is recovered or repaid by a deduction from the employee’s weekly commission. An employee may carry a negative balance in the following weeks if they do not earn sufficient commissions to exceed their draw. The Court rejected Jordan’s commissions plan where employee “overtime” or “premium” pay were both recoverable from future commissions.
The Jordan’s case affirmed and built upon the high Court’s decision in Sullivan v. Sleepy’s LLC which held that (1) employers must make separate and additional payments to purely commissioned employees for every hour worked over forty hours or on Sunday; and (2) draws and commissions cannot be retroactively allocated to meet these requirements. The Court concluded that Jordan’s commission plan did not properly allocate Premium pay as “separate and additional payments” thereby depriving employees of their premium wages.
A couple of side notes: First, employees who are not properly paid their wages are generally entitled under the Wage Act to three times (triple) their losses, plus reimbursement of their legal fees, costs and 12% statutory interest on single damages. These significant penalties are aimed at encouraging the proper payment of wages. Second, the SJC found in Jordan’s that the now-repealed Sunday Pay Statute, G.L.c. 136 § 6 (50), can be enforced under the powerful provisions of the Massachusetts Wage Act. According to the SJC, “Section 148 applies to all wages earned, including those prescribed by statute.”
Bennett & Belfort will continue to monitor this line of Wage Act decisions along with other important cases that impact our business and employment law practice.
Disclaimer: Bennett & Belfort PC publishes the Docket blogs for informational purposes only and they do not, and are not intended to, constitute legal advice. Please feel free to contact us if you have any questions or concerns about your own individual circumstances.
