The legal case between The Boston Globe and a former executive is particularly interesting because it prompted a broader discussion on what constitutes wages and commissions. The plaintiff in this case, Vinay Mehra, was named president of The Globe in 2017. He states that the company hired him with the sole purpose of increasing revenue after notable declines. Mehra entered a profit-sharing arrangement with The Globe in which he expected to receive 5 percent of the company’s profits over $5 million. This agreement was expected to begin in the third calendar year of Mehra’s job, and he was paid $1.4 million for his share of The Globe’s increased profits in 2019.
The issue between the two parties arose in June of 2020 when Mehra was allegedly terminated for refusing to revise the agreement. According to his claim, The Globe wanted to reduce Mehra’s share of profits from 2020 and subsequent years. In response, Mehra alleged in his suit that The Globe failed to pay him his share of more than $10 million in profits that were earned in 2020. He further claimed that this violated the Wage Act and was in breach of contract. Part of his reasoning was that he considered his profits under the agreement a “commission” according to the Wage Act, which would have entitled him to treble damages and attorneys’ fees.
The court recently ruled against Mehra’s bid for treble damages, because the profit- sharing agreement was not deemed to meet the definition of a commission. Pursuant to G.L.c. 149, §148, the Wage Act applies “to the payment of commissions when the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due and payable to such employee.” It was noted that for most purposes, a commission is based off a sale and reflects the employee’s contribution, not the profitability of the entire company. A verdict of treble damages would also not have accounted for the fact that The Globe could experience profits in any given year due to cutting costs rather than a revenue increase, which Mehra’s position was responsible for.
This was certainly an interesting case to follow, as it led the court to evaluate wages in a way previously unseen. The Wage Act has often presented a gray area with regards to commissions, profit sharing, and discretionary and non-discretionary bonuses, and this helps pave a clearer path forward within employment law. If you feel you have been the victim of a wage violation or other employment-related grievance, I encourage you to contact me for a free consultation. Pregent Law has a long history of representing clients in cases involving wage disputes, contract violations, unlawful termination, harassment and discrimination.
