NJ Supreme Court Confirms Commissions Are Protected Wages

Posted by: Brian Schaffer

The New Jersey Supreme Court unanimously ruled that commissions qualify as wages under state law. The case involved a former sales manager who claimed she was owed substantial commissions after selling personal protective equipment during the COVID-19 pandemic.

What Did the New Jersey Supreme Court Rule About Commissions?

The central issue was how the New Jersey Wage Payment Law defines wages. The court distinguished commissions, which directly compensate employees for services, from supplementary incentives such as certain bonuses.

Why Are Commissions Different from Supplementary Incentives?

The court found that the plaintiff’s PPE sales were part of the services she performed and that the related earnings constituted commissions protected under wage law.

What Was the Dispute in the Underlying Case?

The ruling strengthens the distinction between protected commission wages and other forms of incentive compensation under New Jersey law.

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FREQUENTLY ASKED QUESTIONS

Are sales commissions considered wages under New Jersey law?

The New Jersey Supreme Court held in Musker v. Suuchi that compensation paid as a commission for an employee’s labor or services falls within the Wage Payment Law’s definition of wages. The court rejected the idea that a commission can be excluded merely by calling it a supplementary incentive. The precise treatment of a payment still depends on what the compensation represents, but commissions for labor or services receive the Wage Payment Law’s protections.

Can an employer call a commission a bonus to avoid New Jersey wage protections?

The New Jersey Supreme Court focused on the statutory definition and the substance of the payment. If compensation is a commission paid for labor or services, the court said it constitutes wages under the Wage Payment Law rather than becoming an unprotected supplementary incentive because of terminology. Distinguishing a true commission from another type of incentive can require reviewing the compensation plan, how the payment is earned, and the work tied to it.

When is a commission earned in New Jersey?

The Musker decision establishes that qualifying commissions are wages, but the point at which a particular commission is earned can depend on the compensation agreement and the facts. Plans may tie commissions to booking a sale, customer payment, completion of services, cancellations, or other conditions. Employees reviewing an unpaid-commission issue should keep the written commission plan, amendments, sales records, statements, emails, and pay records that show both the governing terms and the transactions at issue.

Why does it matter that a payment is classified as a wage under the New Jersey Wage Payment Law?

Wage classification matters because the Wage Payment Law regulates the payment of wages and provides protections and potential remedies when covered compensation isn’t properly paid. Treating a commission as a protected wage can therefore affect an employee’s ability to pursue unpaid compensation. It doesn’t mean every commission dispute automatically results in liability; the worker still must establish entitlement to the commission and any other elements required for the particular claim.

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