In New Jersey, commissions always constitute "wages" whenever a NJ employer compensates an employee by paying a commission for labor or services rendered by the employee. Commissions are not “supplementary incentives” under New Jersey's Wage Payment Law.
Commissions are “wages” and as wages, commissions have 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. Unsavvy employers may deprive terminated employees of their rightful commission payment by claiming the commission is a “supplemental incentive”. 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.
Employers may sometimes violate New Jersey law by discriminating in their payment of commissions based on the person’s race, sex or other protected class, in which case the employer would be additionally violating the Diane B. Allen Equal Pay Act. See Unequal Pay and Wage Claims - Diane B. Allen Equal Pay Act.
Don’t sit on your rights. If your employer failed to pay your wages in accordance with the law, 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.
Distinction Between “Commission” and “Supplementary Incentive” Is Important
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. The Wage Theft Act broadened the scope protections for employees, and it significantly amended New Jersey’s Wage Payment Law and the Wage and Hour Law
A commission is generally designed in part to promote productivity by hitting a target sales figure. However, the presence of a financial incentive to promote productivity does not convert a commission into a bonus. According to a unanimous New Jersey Supreme Court ruling in Musker v. Suuchi, Inc., 260 N.J. 178 (2025), and New Jersey’s Wage Payment Law, a commission for hitting sales figures is not a “supplementary incentive” as is a bonus; a commission always qualifies as wages. In Musker v. Suuchi, Inc., the Court stated that plain text of that definition of “wage” under the Wage Payment Law is clear and unambiguous.
As the Court held in Musker v. Suuchi, just because a potential financial compensation has the capacity to incentivize, it does not mean it is automatically excluded from being a wage under the NJ Wage Payment Law.
What Exactly Is a Wage?
The Court in Musker v. Suuchi, Inc., 260 N.J. 178 (2025) clearly defined, what constitutes a “wage” having all the protections of the Wage Theft Act, by applying statute law and Merriam-Webster's Collegiate Dictionary as follows:
To qualify as 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 the Musker v. Suuchi, Inc. Court 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). The Court defined "Service" to mean the official work or duty that one is required to perform." The 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.
The Direct Monetary Compensation to Employee Can Be Paid Several Ways
The Court stated that an employee's "direct monetary compensation" can be "determined on a time, task, piece, or commission basis" under N.J.S.A. 34:11-4.1(c).
The Court Further Defined Commission
The Court stated 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).
The Court stated that 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.
Supplementary Incentives Are Excluded from Definitions of “Wages”
The NJ Supreme Court in Musker v. Suuchi, Inc., 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.
Because the Wage Payment law does not define the terms "supplementary" and "incentives," The Court applied their ordinary meanings. "Supplementary" generally means "added to something else" or "in addition to something else." and “Incentive" generally means "something, especially money, that encourages a person or organization to do something."
A "Supplementary Incentive” is above and beyond "Labor or Services”
The court stated that “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," while a "commission" earned "for labor or services rendered by an employee" can never be a "supplementary incentive.”
Employers who refuse or fail to pay commissions to their employees are subject to a six-year lookback period to determine the amount rightfully owed to employees, plus, an additional 200% of the amount in liquidated damages, and attorney’s fees. See NJ Employees and Wage Theft Act-Part 1, NJ Wage Payment Law Amendments.
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.
Employee Performance Evaluations can sometimes be the result of an illegal bias on the part of the evaluator. If an employer pays less wages to some employees, based on the employee’s protected class, such as sex, race etc., then they pay to employees not of that class, then the employer may also be in violation of the New Jersey Law Against Discrimination. See New Jersey Age Discrimination Lawyer.
Note: This article is for general information purposes only, and it is not to be construed as giving legal advice in any specific case.
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