In a significant decision, the New Jersey Supreme Court unanimously ruled that commissions qualify as wages under state law. This ruling is a major victory for employees who rely on commissions as part of their earnings, including a former sales manager who claimed she was owed $1.3 million in unpaid commissions after selling over $32 million in personal protective equipment (PPE) during the height of the COVID-19 pandemic.
The case involves a former senior enterprise sales manager at Suuchi Inc., a software company, who brought her claim to the New Jersey Supreme Court after an appellate panel rejected her argument. The key issue was how the New Jersey Wage Payment Law (WPL) defines wages, describing them as “direct monetary compensation for labor or services rendered by an employee, where the amount is determined on a time, task, piece, or commission basis.
The Supreme Court determined that commissions are always considered wages under the WPL and cannot be classified as “supplementary incentives.” The justices emphasized that supplementary incentives, such as bonuses, are additional earnings designed to motivate employees beyond their regular work. Commissions, on the other hand, directly compensate employees for services they provide, making them wages under the law.
In the plaintiff’s case, the court found that since she was actively selling PPE as part of her job, those earnings constituted commissions and should be protected under wage law. The ruling overturned the appellate court’s previous decision, which had suggested that commissions tied to PPE sales fell outside her regular role and were therefore supplementary.
The lawsuit, initially filed in 2020, alleged that Suuchi Inc. and its executives failed to pay the plaintiff her rightful commissions. The company had introduced a revised commission structure for PPE sales, shifting from a gross revenue-based model to a net revenue-based model, but the plaintiff claimed she was never required to sign an agreement acknowledging this change.
This ruling reinforces that commissions are wages, ensuring stronger protections for employees who rely on them. If you believe your employer has wrongfully withheld commissions or violated wage laws, contact the attorneys at Fitapelli & Schaffer for a free and confidential consultation.