Editor: Sanmathi (Sanu) Dev, Esq.
Below is an article written by my colleague, Ralph R. Smith, 3rd, Esq., Co-Chair of our firm’s Labor & Employment Group. If you wish to view additional articles and/or be kept up-to-date with labor & employment issues, visit our HR Resource blog by clicking here.
A very important issue that was never resolved until recently in New Jersey is whether commission payments constitute “wages” under the New Jersey Wage Payment Law (“WPL”). This is an extremely important question under the WPL because if commission payments are considered “wages” under that law, employers who fail to properly pay the right commissions could find themselves adversely affected by the provisions of the WPL, which includes the possible payment of double any “wages” that are wrongly withheld from the employee.
The above issue on commissions and the WPL was recently addressed on March 17, 2025, by the New Jersey Supreme Court in Musker v. Suuchi, Inc. In Musker, the Plaintiff salesperson sought to obtain commissions that were owed for her selling of Personal Protective Equipment (“PPE”) during the COVID-19 pandemic. Along with selling such products, the Plaintiff primarily sold software subscriptions. Plaintiff was paid both a salary and commissions for sales made. Ultimately, Plaintiff sold over $35 Million of PPE products, and a dispute arose over how much in commission income was due and whether that income constituted “wages” under the WPL. The employer argued that the commissions for the PPE sales should be considered “supplementary incentives” and not “wages” under the WPL because PPE was a new product being sold and not its primary business.
Before the case reached the New Jersey Supreme Court, both the Superior Court of New Jersey-Law Division and the New Jersey Appellate Division rejected Musker’s WPL claim, concluding that because her sale of PPE went “above and beyond her sales performance, and the [PPE] commissions are calculated independently of her regular wage,” such commissions did not constitute “wages” under the WPL.
In rendering its decision, the New Jersey Supreme Court rejected both lower court rulings. It concluded that commissions must be considered “wages” under the WPL and cannot be excluded as “supplementary incentives” since they are tied directly to the labor or services of the employee. In rejecting the employer’s claim that the commissions fell within the WPL’s exception for “supplementary incentives” the court declared that compensation that “motivates employees to do something above and beyond their ‘labor or services’” is a supplementary incentive, not commissions, because such payments are directly connected to an employee’s labor and services performed. The court further rejected the other argument raised by the employer that the PPE sales were not part of the company’s normal business and fell within the WPL’s exclusion for “supplementary incentives.” Once the employer began to sell PPE, the Court concluded, it became part of its business, and it likewise declared that commissions will always be considered “wages” under the WPL, regardless of whether they are for new or temporary products, as they will almost always be tied to the employee’s provided labor or services.
Musker is a very important decision for employers to know, especially if your company compensates employees with commissions. It is now more critical than ever to ensure that such payments are properly calculated to satisfy the terms of your commission arrangement with the employee. Otherwise, an employer could face the possibility of a double payment requirement, and a possible award of attorney’s fees, if litigation ensues where there is a dispute over the commission payment. Thus, employers now need to redouble such compliance efforts in the face of the Musker decision.