In a landmark decision, the New Jersey Supreme Court recently ruled in Musker v. Suuchi, Inc. that commissions earned by employees must be treated as wages under New Jersey’s Wage Payment Law (WPL). This ruling clarifies that employers cannot classify earned commissions as “supplementary incentives” to avoid legal obligations related to wage payments.

Key Takeaways for Employers:

  1. Review Your Commission Policies Immediately: Ensure your commission agreements clearly define commissions as wages and outline how they are calculated, earned, and paid.
  2. Maintain Transparent Commission Structures: Commissions must be directly tied to the employee’s work or services. Clearly document how commissions are earned and when they are payable.
  3. Pay Commissions Promptly: Like regular wages, commissions must be paid in accordance with the timeline set by state law. Failure to do so could result in significant legal exposure.
  4. Train Your Management Team: Educate your HR and payroll departments on this ruling. Ensure they understand that commissions, once earned, cannot be withheld or treated differently from regular wages.
  5. Perform a Legal Compliance Audit: Consider consulting with employment law counsel to conduct a review of your wage and commission policies to avoid potential legal actions.

The Bottom Line:
The New Jersey Supreme Court’s decision underscores that all commissions directly tied to employees’ labor or services are protected wages under state law. Businesses should act proactively to ensure compliance and avoid costly litigation.

Protect your business by staying informed and proactive—review your commission structures today! If you have commissioned employees, contact our firm to discuss how we can help you ensure compliance and protect your business interests

Information contained in this blog is provided for informational purposes and does not constitute legal advice or opinion. You should consult with an attorney regarding the specifics of your matter or legal issue.

The post Legal Alert: Commissions Count as Wages, Says NJ Supreme Court first appeared on Morea Law LLC.