The Massachusetts Supreme Judicial Court has ruled that an executive terminated in a reduction in force could not sue under the state Wage Act for the delayed payment of a retention bonus he was owed under an agreement with his employer.

Following his 2021 termination, the plaintiff sued Syncsort, Inc. for breach of contract and violation of the Wage Act, arguing that the company failed to pay him the second of two retention-bonus installments on his final day of employment. The company issued the payment eight days later.

A Concord District Court judge granted summary judgment for the employer on the Wage Act claim, finding that the payment did not constitute “wages” within the meaning of G.L.c.149, §148.

A panel of the District Court Appellate Division affirmed, and the Supreme Judicial Court took the case on direct appellate review.

Writing for the majority, Justice Gabrielle R. Wolohojian concluded that the retention bonus payments were “not made solely in exchange for the plaintiff’s labor or services, but rather depended on additional contractual conditions,” and therefore fell outside the scope of the statute.

Because the payments were contingent on remaining employed through certain retention dates and on other specified conditions, they were considered supplemental or incentive compensation, not wages earned for work already performed.

Chief Justice Kimberly S. Budd wrote a concurrence emphasizing that the result turned on the nature of the compensation, not the timing of the payment. The Wage Act, she noted, applies to “ordinary pay compensating an employee for his or her typical work,” whereas retention or incentive bonuses are offered “in exchange for something other than the typical work that an employee performs as part of his or her job.”

The plaintiff had entered into a retention bonus agreement providing for two payments as an incentive to remain with the company during a period of corporate transition. He received the first payment but was laid off on the second retention date; the second payment followed shortly after.

The SJC agreed with the lower courts that such payments are analogous to other forms of contingent or incentive-based compensation – such as discretionary stock awards or accrued benefits subject to conditions – that fall outside the Wage Act’s definition of wages.

For employers, the decision reinforces that bonuses conditioned on continued employment or other contingencies are not subject to the Wage Act’s immediate payment and treble-damages provisions. Employers should ensure that bonus or retention agreements clearly set out the conditions for earning payment and are drafted to distinguish such compensation from regular wages.

The ruling provides additional clarity for employers structuring retention agreements in workforce reductions or mergers.