New Jersey Employer Update: NJ Supreme Court Rules Commissions are Wages under State’s Wage Payment Law, by Christopher Nucifora, Esq., 5-5-2025

On March 17, 2025, the New Jersey Supreme Court delivered a unanimous decision in Musker v. Suuchi, Inc. clarifying the classification of commissions under the New Jersey Wage Payment Law (WPL). The Court ruled that commissions are considered wages under the WPL, thereby extending the WPL’s protections to employees earning such compensation.​

Case Background (as per the syllabus)

Plaintiff Rosalyn Musker worked in sales for defendant Suuchi, Inc., which sells software subscriptions to apparel manufacturers. In addition to her base salary, Musker was eligible for commissions under Suuchi’s Sales Commission Plan (SCP). In response to the COVID-19 pandemic, Suuchi expanded its offerings to sell personal protective equipment (PPE), also on a commission basis, with Musker generating approximately $34.4 million in PPE sales. The parties disputed whether the 4% commission she was entitled to for those sales was of gross or net revenue. The parties also disagreed about whether Musker’s PPE commissions are “wages” or are excluded from the WPL as “supplementary incentives” under N.J.S.A. 34:11-4.1(c).

Musker filed a complaint alleging that Suuchi violated the WPL by withholding her “wages.” The trial judge dismissed the WPL claims, holding that Musker’s PPE commissions were not “wages” under the WPL. The Appellate Division affirmed. 479 N.J. Super. 38, 64 (App. Div. 2024). The Court granted leave to appeal. 258 N.J. 470 (2024).

Legal Issue

The central question was whether the commissions Musker earned from PPE sales constituted “wages” under the WPL, which defines wages 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 excluding any form of supplementary incentives and bonuses, which are calculated independently of regular wages and paid in addition hereto.”

Court’s Analysis

In its findings, the Court emphasized that the WPL’s plain text definition of wages is “clear and unambiguous” and subsequently that commissions paid directly for labor or services rendered are inherently wages. The Court distinguished these from “supplementary incentives,” which it noted that while the WPL does not define these two terms, the court looked to their ordinary meanings. Putting the two terms together, a “supplementary incentive” they noted is compensation that motivates employees to do something above and beyond their “labor or services.” Examples of supplementary incentives (as the DOL and the National Employment Lawyers Association of New Jersey (NELA) explain) may include payment for sharing office space with another employee, working out of a particular office location, or achieving perfect attendance. In those examples, the added compensation is for doing something that is beyond the employee’s “labor or services.” Therefore, “supplementary incentives” under the WPL are distinct from “commissions,” which provide monetary compensation for “labor or services” rendered by an employee. In their ruling, the Court disagreed with the notion that receiving a base salary turns commissions into supplementary incentives under the WPL.

Implications of the Decision

This ruling has significant implications for both employers and employees in New Jersey:​

• Employer Obligations: Employers must recognize that commissions are classified as wages under the WPL, necessitating compliance with all related requirements, including timely payment and adherence to wage deduction laws.​
• Employee Rights: Employees earning commissions are entitled to the protections afforded by the WPL, including recourse for unlawful withholding of wages and potential recovery of liquidated damages.​
• Compensation Planning: Businesses should carefully structure compensation plans, clearly distinguishing between wages and supplementary incentives, to ensure compliance with state wage laws and avoid potential disputes.​

Conclusion

The New Jersey Supreme Court’s decision in Musker v. Suuchi provides clarity on the classification of commissions under state wage law, reinforcing the principle that commissions are integral components of employee compensation and are entitled to legal protections as wages.​

Author: Christopher Nucifora, Co-Managing Partner of Kaufman Dolowich’s New Jersey Office and Chair of the firm’s Commercial Litigation Practice Group