The Massachusetts Supreme Judicial Court has held that Jordan’s Furniture’s pay plan for its sales employees violates Massachusetts overtime law by unlawfully utilizing draws against commissions to cover its overtime obligations. The SJC makes clear that employers cannot use commissions or draws against commissions to cover the overtime compensation owed to employees.

Massachusetts Supreme Judicial Court

SUMMARY: (court decision – opens in PDF)

“The primary issue in this case is whether the commissions-based compensation scheme for sales employees of a retail employer, Jordan’s Furniture, Inc. (Jordan’s), complied with the overtime statute, G.L.c. 151, §1A, and the Sunday pay statute, G.L.c. 136, §6(50). We held in Sullivan v. Sleepy’s LLC, 482 Mass. 227, 228 (2019) (Sleepy’s), that (1) employers must make ‘separate and additional payments’ to one hundred percent commission sales employees, to compensate the employees ‘for every hour [they] worked over forty hours or on Sunday’; and (2) ‘draws and commissions cannot be retroactively allocated’ to meet these requirements ‘even if th[o]se draws and commissions equaled or exceeded the minimum wage for the employees’ first forty hours of work and one and one-half times the minimum wage for all hours worked over forty hours or on Sunday.’

“This class action lawsuit was brought in the Superior Court by a former Jordan’s employee on behalf of all persons employed at one of Jordan’s Massachusetts stores as sales employees between 2016 and 2019 and who worked more than forty hours in any work week or on any Sunday. The plaintiff class alleged that Jordan’s failed to comply with the requirements this court outlined in Sleepy’s. … On cross motions for summary judgment, the motion judge agreed and granted summary judgment in favor of the plaintiff class because Jordan’s compensation plan ‘failed to remit separate and additional payments to its sales [employees] for overtime and Sundays,’ thereby violating the overtime and Sunday pay statutes. Subsequently, after the plaintiff class sought statutory attorney’s fees and costs as the prevailing party, the same judge utilized the lodestar method to calculate the award of attorney’s fees, discounted hours spent in settlement negotiations, and enhanced the lodestar figure by using a four times multiplier.

“Jordan’s now appeals, maintaining that its compensation scheme complied with the overtime and Sunday pay statutes, that the judge erred in applying our decision in Sleepy’s retroactively, and that there is no private right of action for violations of the Sunday pay statute. Both parties also appeal from aspects of the judge’s calculation of attorney’s fees.

“We conclude, as the motion judge did, that Jordan’s compensation scheme violated G.L.c. 151, §1A, and G.L.c. 136, §6(50). Further, the judge did not err in applying our holding in Sleepy’s to this case. We also conclude that the Sunday pay statute is enforceable under the Wage Act’s private right of action, G.L.c. 149, §150.”