The New Jersey Employment Law Firm Blog
Employees are entitled to pay for the work they perform for their employers. An employer that fails to pay an employee what they have earned could face significant penalties under New Jersey employment law. The New Jersey Wage Payment Law (NJWPL) imposes civil penalties on employers for violating its provisions. Employees may also bring civil lawsuits under the NJWPL to recover the amount of pay their employers owe them, plus additional liquidated damages. The wage law defines “wages” to include numerous forms of payment. The New Jersey Supreme Court recently ruled in favor of an employee in a claim under the NJWPL. The dispute involved whether commissions based on performance count as “wages” when an employee also receives a base salary. The court’s ruling provides an employee-friendly definition of “wages.”
The NJWPL defines “wages” as money paid to an employee for their “labor or services…on a time, task, piece, or commission basis.” It excludes “supplementary incentives and bonuses” that are not part of an employee’s “regular wages.”
Employers must pay wages at least twice a month for most employees. Each payment must be for the full amount the employee has earned up to that point, with exceptions for certain withholdings like payroll taxes, health insurance premiums, and retirement plan contributions. An employee can file suit to recover unpaid wages. The NJWPL allows them to claim 200 percent of the amount owed as liquidated damages, plus attorney’s fees and court costs.
The plaintiff in the case before the New Jersey Supreme Court worked in a sales position for a software company. When she began working for the company, it sold software to clothing manufacturers. She received a base salary and a commission based on her sales numbers. When the COVID-19 pandemic began in 2020, the company pivoted to Personal Protective Equipment (PPE) sales. The plaintiff reportedly produced over $34 million in PPE sales for the company. A dispute then arose over the commissions owed to her.
The employer disputed the amount of commissions it owed. It also denied that the commissions were “wages” under the NJWPL. It maintained that, since the plaintiff received a base salary, the commissions were “supplementary incentives” that the statute did not consider wages.
The plaintiff filed a lawsuit alleging that her employer violated the NJWPL by withholding her commissions. Both the trial court and the Appellate Division agreed with the employer that the commissions were “supplementary incentives,” not “wages,” for NJWPL purposes. They held that the plaintiff could sue for breach of contract, but not under the wage law.
The New Jersey Supreme Court reversed these rulings in a unanimous opinion. It found that the commission structure at issue counts as “wages.” The court considered the “ordinary meanings” of the terms used in the statute’s definition. It found that a “supplementary incentive” refers to compensation “that motivates employees to do something above and beyond their labor or services.” Since the commission structure was directly tied to the plaintiff’s performance of her job duties in sales, it met the NJWPL’s definition of “wages.”
The employment attorneys at the Resnick Law Group are committed to fighting for workers’ rights in New Jersey and New York. If you have experienced wage violations or other unlawful employment practices, our team is available to discuss your options. Please contact us online or at 973-781-1204 today to schedule a confidential consultation to see how we can assist you.