Virginia High Court Rules Wage Theft Law Does Not Cover Commissions

The Virginia wage theft statute does not extend to protect employee commissions, the state Supreme Court has ruled.

The Virgibia Supreme Court wrote that, in the plain meaning, the term “wages” ordinarily is distinct from commissions. The court found that while the legislature can employ the word “wages” to encompass commissions, either expressly or contextually, it did neither in the statute (Code § 40.1-29).

“A plain language reading of the statute, therefore, suggests that the General Assembly did not intend to include commissions in the statute, because the word is not in the statute,” the high court concluded.

The ruling reversed a Court of Appeals judgment in a case involving employees of a construction company.

The plaintiffs were five former employees of JES Construction. Four of the plaintiffs would go to prospective customers’ homes to sell construction services. One plaintiff was responsible for repairing installations and selling additional goods and services. Four of the workers were paid exclusively on a commission basis. One was paid commissions plus other compensation.

The commissions were paid as 10% of the gross price of the sales they made. JES paid half of the commission once the contract’s three-day rescission period had expired and the contract had become final. JES paid the remainder once the job was complete and the customer had made a final payment.

The plaintiff employees often experienced significant delays in receiving payment for their full commission. The delays could be caused by the engineering and permitting phases of the contract. Four of the five plaintiffs later signed an agreement with JES under which they agreed that the commissions would be paid up to 14 days after the employees no longer worked for JES. No further commissions would be paid after 14 days.

The plaintiffs alleged that JES refused to pay commissions after they left the company and that, when they left the company, they were owed thousands of dollars in earned but unpaid commissions.

They argued that their commissions were earned after the customer’s three-day rescission period ended, and that JES’s refusal to pay their commissions constituted wage theft. They asserted that commissions constituted wages under the wage theft statute.

JES argued that the wage theft law does not apply to commissions.

A circuit agreed with JES, concluding that the statute does not cover commissions. The plaintiffs appealed to the Court of Appeals, which reversed, holding that the term “wages” as used in the wage theft statute applies to commissions, resting its conclusion on the remedial purpose of the statute, past decisions interpreting the term “wages” in other contexts, and an interpretation by an administrative agency contained in a field manual.

The high court has now ruled that the Court of Appeals erred.

Topics Legislation Fraud Virginia