Massachusetts Court Rules Retention Bonuses Are Not Wages - Key Implications for M&A Transactions

Sep 16, 2026

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Massachusetts Supreme Judicial Court affirmed that retention and change-of-control bonuses are not “wages” under the Massachusetts Wage Act. In Nunez v. Syncsort Incorporated, an employee sought treble damages after a delayed retention bonus payment tied to staying through a merger and integration period. The ruling provides employers assurance that failure to pay such contingent bonuses fully on termination does not trigger automatic triple damages, attorneys’ fees, or personal liability. For M&A deals, the decision clarifies payment timing, while still requiring careful contract drafting and proper treatment of commissions and true wages.

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Nunez v. Syncsort Incorporated

Case background and holding

M&A considerations

Implications for employers

Wage Act requirements

Practical risks and drafting cautions

Massachusetts Court Rules Retention Bonuses Are Not Wages – Key Implications for M&A Transactions Description By Lawrence J. Sheh, Alicia J. Samolis, Michael A. Gamboli, and Madeline M. Ursini On October 22, 2025, in Nunez v. Syncsort Incorporated, et al. , the Massachusetts Supreme Judicial Court affirmed the decision of the Massachusetts appellate court holding retention and change-of-control bonuses are not considered wages under the Massachusetts Wage Act. The decision provides important assurance for employers that failure to pay such bonuses in full on the date of termination or in the event of a dispute does not trigger the draconian Wage Act penalties, such as automatic triple damages and attorneys’ fees, as well as potential personal liability. Nunez v. Syncsort Incorporated, et al. The Court’s decision arose from a tech employee’s claim against his former employer, Syncsort, for a delayed retention bonus payment following its merger with another company. The employee, a senior finance director, had a retention bonus agreement contingent on remaining employed in good standing through certain dates following the merger. After the company terminated him on the last day he needed to work to earn the bonus and paid the final bonus eight days later, he sued, alleging a violation of the Massachusetts Wage Act and sought treble damages for the company’s failure to pay the bonus on his last day of employment. The Court held that the retention bonus was not “wages” under Massachusetts law because the bonus was not paid in exchange for services or labor rendered by the employee. Instead, the bonus was contingent on the employee remaining with the company during a “time of change and integration”, specifically, the merger with another company and subsequent rebranding. As the Court explained,“[w]e see no reason why retention agreements should be treated any differently from other types of compensation that are contingent upon continued employment to a particular date and are in addition to the compensation the employee receives in exchange for his or her labor and services.” M&A Considerations In M&A transactions, retention bonuses and change-in-control bonuses are commonly used to incentivize key employees and designed to encourage employees to remain with the company through critical periods, such asthe due diligence process and closing of the transaction. Change-in-control bonuses, specifically, are triggered by a change in ownership or control and provide additional compensation if employees are terminated or are asked to stay through the post-transaction integration. For sellers, these agreements help ensure a smooth transition during and following the sale process. In closely held businesses, retention or change-in-control bonuses can be particularly important in ensuring the business owners navigate the complexities of a sale. These agreements reduce the owner’s administrative and operational burdens, such as responding to due diligence requests, by making the continued employment of staff that perform those functions more likely. Retention agreements also help avoid the buyer becoming nervous due to attrition by key employees. Depending on the structure of the transaction, employees may very well be terminated by the selling company on the day of closing. The termination triggers the requirement to pay all wages due to an employee on the last day of employment. Nunez provides the much needed clarity that an employer does not need to pay the retention bonuses or change-in-control bonuses, even if earned, on the date of termination under the Page 1 [www.psh.com](www.psh.com) Massachusetts Wage Act. Practically this is important to employers because the employer may not know if the employee satisfied the contingency until the date of termination (as the contingency often requires the employee to work until the date terminated to get the bonus) and logistically may not be able to make the payment

FAQs

What did the Massachusetts Supreme Judicial Court decide about retention bonuses under the Massachusetts Wage Act?

The Court held that retention and change-of-control bonuses are not “wages” under Massachusetts law when they are contingent on continued employment through a change-and-integration period, such as a merger.

Why did the employee in Nunez v. Syncsort sue after his retention bonus was delayed?

He alleged the delayed retention bonus violated the Massachusetts Wage Act and sought treble damages because he was terminated before the final day he needed to work and the bonus was paid eight days later.

How does the decision affect payment timing and liability for employers in M&A transactions?

Employers do not need to pay these contingent bonuses on the employee’s termination date under the Wage Act, reducing the risk of automatic triple damages, attorneys’ fees, and personal liability; however, breach of contract claims may still be possible if the contract terms are not followed.

Sep 16, 2026

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