If a company refuses to pay an employee a commission as a “wage”, saying it is not a “wage” payment because it is a “supplemental incentive” payment, the employee can file a lawsuit, potentially receiving triple the amount of the lost commission plus attorneys’ fees.
In New Jersey, when an employer compensates an employee by paying a commission for labor or services rendered, the commission always constitutes “wages” under New Jersey’s Wage Payment Law. The Wage Theft Act broadened the scope of retaliation protections for employees who report or oppose wage theft, and it significantly amended New Jersey’s Wage Payment Law and the Wage and Hour Law. See NJ Employees and Wage Theft Act-Part 1, NJ Wage Payment Law Amendments. The Wage Payment Law includes provisions for enhanced damages, including liquidated damages.
Don’t sit on your rights. If your employer failed to pay your wages in accordance with the law, or if you think you have been retaliated against for asserting your legal rights, you should contact this law office immediately for a free consultation. This law office accepts cases from all over New Jersey and has locations in Southern, Central and Northern NJ to meet with clients. Call today for a free consultation.
Commissions are considered "wages" under the Wage Payment Law subject to its protections. Under the Wage Payment Law, a commission cannot be excluded from the definition of wages as a "supplementary incentive." Unscrupulous companies may try to cheat their employees by claiming commissions are not wages. When this happens, an employee can bring a suit under NJ Wage Payment Law, and potentially receive triple the amount of the lost commission, making the employer company liable for treble damages and attorneys’ fees. Employers will sometimes additionally violate the law by discriminating in their payment of commission based on the person’s race, sex or other protected class. See Unequal Pay and Wage Claims - Diane B. Allen Equal Pay Act.
The distinction between “commission” and “supplementary incentive” is important because a “commission” has all the legal protections of New Jersey Wage Payment Law (WPL), N.J.S.A. 34:11-4.1 to -4.15 as amended by the 2019 Wage Theft Act. Therefore, employers who refuse or fail to pay commissions to their employees are subject to:
a) a six-year lookback period to determine the amount rightfully owed to employees,
b) plus an additional 200% of the amount in liquidated damages, and
c) attorney’s fees.
A commission for hitting sales figures is not a “supplementary incentive” as is a bonus. According to NJ’s Wage Payment Law and a unanimous NJ Supreme Court ruling, a commission always qualifies as wages. Just because compensation has the capacity to incentivize does not mean it is automatically excluded from being a wage as a “supplementary incentive” under the Wage Payment Law. Some companies are still attempting to cheat employees by claiming a commission is really a “supplementary incentive” and not part of wages. If they target a person based on their class, to cheat them out of wages, it is is also a violation of NJ Discrimination law. See Bergen County, New Jersey Sex Discrimination Lawyer.
Although the Wage Theft Act triples employers' potential wage liability for violations of the Wage Payment Law, it provides employers with a good faith defense to liquidated damages, that defense is only available where the employer pays the employee the amounts due within 30 days and admits the violation, and the violation was a first offense and was an inadvertent error made in good faith.
In a recent NJ Supreme Court case, the Court stated that plain text of that definition of “wage” under the Wage Payment Law is clear and unambiguous. The Court in Musker v. Suuchi, Inc., 260 N.J. 178 (2025) defined what constitutes a “wage” as follows:
First: To constitute a "wage" under N.J.S.A. 34:11-4.1(c), there must be "direct monetary compensation for labor or services rendered by an employee... the compensation is tied directly to "labor or services" performed by an employee. The Court noted that the Wage Payment Law does not define those terms, so they ascribed their ordinary meaning and significance and read them in context to give sense to the Wage Payment Law’s definition of "wages." The Court stated:
"Labor" means work of any type, including mental exertion; physical or mental exertion to achieve some useful or desired purpose, especially for gain," quoting Black's Law Dictionary 1043 (12th ed. 2024).
"Service" means the official work or duty that one is required to perform."
Those unambiguous definitions of “Labor” and “Service” give context to the requirement that the "direct monetary compensation" must be for work that an employee is required to perform.
Second: Under N.J.S.A. 34:11-4.1(c), an employee's "direct monetary compensation" can be "determined on a time, task, piece, or commission basis."
A "commission," means "a fee paid to an agent or employee for transacting a piece of business or performing a service; especially a percentage of the money received from a total paid to the agent responsible for the business, " ... quoting Merriam-Webster's Collegiate Dictionary 249 (11th ed. 2020).
Thus, because a commission directly compensates an employee for performing a service, it always meets the definition of "wages" under N.J.S.A. 34:11-4.1(c) as "direct monetary compensation" for "labor or services" rendered by an employee.
Third: The Court defined what is excluded from N.J.S.A. 34:11-4.1(c)'s definition of "wages". The Court stated, “supplementary incentives . . . which are calculated independently of regular wages and paid in addition thereto. The Wage Payment law does not define the terms "supplementary" and "incentives," so we look to their ordinary meanings. "Supplementary" generally means "added to something else" or "in addition to something else."...
"Incentive" generally means "something, especially money, that encourages a person or organization to do something."
“Putting the two terms together, a "supplementary incentive" is compensation that motivates employees to do something above and beyond their "labor or services." Thus, under N.J.S.A. 34:11-4.1(c), a "supplementary incentive" is not payment for "labor or services," and a "commission" earned "for labor or services rendered by an employee" can never be a "supplementary incentive.”
The Court recognized that as a simple matter of common sense, monetary compensation of course motivates, encourages, and incentivizes employees.
However, the primary question addressing whether compensation is a wage covered under the Wage Payment Act or “supplementary incentive", which is not covered, is not whether the compensation only has the capacity to do those things, but rather whether the compensation incentivizes employees to do something beyond their "labor or services." If that is the case, then the compensation is a "supplementary incentive" and is excluded from the definition of "wages" under N.J.S.A. 34:11-4.1(c). In other words, just because compensation has the capacity to incentivize does not mean it is automatically excluded from being a wage as a "supplementary incentive" under the WPL.
Under N.J. Stat. Ann. § 34:11-4.1 (c), an employee's direct monetary compensation can be determined on a time, task, piece, or commission basis. A "commission," means a fee paid to an agent or employee for transacting a piece of business or performing a service; especially a percentage of the money received from a total paid to the agent responsible for the business. Thus, because a commission directly compensates an employee for performing a service, it always meets the definition of wages under N.J. Stat. Ann. § 34:11-4.1 (c) as direct monetary compensation for labor or services rendered by an employee. If the failure to pay was due to race or ethnic bias, New Jersey Ethnic Discrimination Lawyer, there is also violation of the New Jersey Law Against Discrimination.
WHAT YOU CAN DO
If your employer cheated you out of wages or subjected you to retaliation for complaining about, objecting to, or reporting what you believe is your employer’s illegal wage payment or other improper conduct, you should contact this law firm today for a free consultation. I am an experienced, aggressive and compassionate employment attorney who will be aggressive about enforcing your rights. This law office accepts cases from all over New Jersey and has locations in Southern, Central and Northern NJ to meet with clients.
If you are being subjected to such unlawful workplace acts or retaliation, contact Hope A. Lang, Attorney at Law today for a free consultation.
Hope A. Lang, Attorney at Law represents workers throughout the entire state, including Hackensack, Jersey City, Newark, Irvington, Orange, East Orange, Trenton, Paterson, Montclair, Elizabeth, North Brunswick, Cherry Hill, Vineland, Union, Plainfield, Hamilton Township, Lakewood, Edison, Parsippany-Troy Hills, Franklin, Lakewood, and every NJ County, including Bergen, Hudson, Middlesex, Essex, Monmouth, Somerset, Ocean, Union, Camden, Passaic, Morris, Gloucester, Atlantic, Burlington, Camden Counties.