On March 17, 2025, the New Jersey Supreme Court unanimously held in Musker v. Suuchi that commissions are included in the definition of “wages” under New Jersey’s Wage Payment Law (“WPL”). Wages under the WPL are defined as “direct monetary compensation for labor or services rendered by an employee, where the amount is determined on a time, task, piece or commission basis.” The trial and appellate courts held that commissions were a “supplementary incentive,” which is excluded from the definition of wages under the WPL. Supplementary incentives were described by the court as additional “compensation that motivates employees to do something above and beyond their labor or services.”
However, the Supreme Court emphasized that the ordinary definition of “commission” under the WPL includes direct compensation to an employee for performing a service. The Court held that the definition of commission “always meets the definition of ‘wages’ under [the WPL]” and reversed the decision by the appellate court that commissions were a supplementary incentive to an employee’s wages. [1]
While not mentioned in the case, this clarification by the Supreme Court increases an employer’s liability for unpaid commissions. New Jersey’s Wage Theft Act (a 2019 amendment to the WPL) provides employees with the ability to claim damages for both the unpaid wages and up to 200% of the unpaid wages in additional liquidated damages. Thus, an employer’s failure to pay commissions may result in significantly greater damages if the employer is found responsible for unpaid wages. Accordingly, New Jersey employers who pay commissions as part of employees’ compensation structure need to be mindful of this increased liability and ensure that their payments of commission to employees are accurate and timely pursuant to the applicable commission plan or agreement, and are not improperly withheld.
[1] The case was then remanded to the trial court for further determination of the plaintiff’s specific claim for unpaid commissions.
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