Judge rejects Wage Act claim for unpaid travel commissions

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A “travel planner” could not bring a Wage Act claim against a travel agency for unpaid commissions stemming from trips she had booked for customers but which they had not yet completed as of the date of her termination, a Superior Court judge has ruled.

Under her contract with defendant Vacationeer, LLC, plaintiff Jessica Ford was entitled to a percentage of commissions that Vacationeer received from travel vendors for trips and services that customers booked through her.

Vacationeer did not receive commissions from vendors until customers actually took the trips they booked.

After Vacationeer terminated Ford, it paid her $5,432 for her share of commissions it had received for trips completed as of her termination date.

Ford argued that she was entitled under the state Wage Act to $34,000 in unpaid commissions for trips that customers had booked but not completed as of the date of her discharge and another $100,000 in commission wages she claims she would have received if not for what she categorized as her “unlawful and premature” termination.

Judge Cathleen E. Campbell disagreed.

“[T]he only commissions due to the Plaintiff on her termination date were for commissions earned and received by Vacationeer up to her date of termination,” Campbell wrote, granting Vacationeer’s motion for summary judgment. “For reservations that the Plaintiff booked, for trips that had not yet occurred, no commissions were due because they were not yet ‘due and payable’ [within the meaning of the Wage Act] since it was possible the reservation could be cancelled.”

Ford also claimed she had been misclassified as an independent contractor, but Campbell made no finding on the issue, stating that it was unnecessary because the Wage Act claim failed either way.

The 14-page decision is Ford v. Vacationeer, LLC, et al., Lawyers Weekly No. 12-032-25.

Creating more case law

Vacationeer’s attorney, Nicholas F. Feloney of Boston, said the decision is helpful as it reaffirms the statutory limitations imposed on Wage Act claims with respect to commissions.

“Surprisingly, there’s a pretty limited amount of case law from the state trial court on this precise issue,” Feloney said. “There’s a bunch from the U.S. District Court in Massachusetts, but not a whole lot at the state level.”

The plaintiff’s attorneys, Dianne E. DeModena and Darius Pakrooh, did not respond to requests for comment.

Surprisingly, there’s a pretty limited amount of case law from the state trial court on this precise issue. There’s a bunch from the U.S. District Court in Massachusetts, but not a whole lot at the state level.

— Nicholas F. Feloney, Boston

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But Maura A. Greene, an employment lawyer in Boston, pointed out that while the Wage Act is very favorable to plaintiffs, here a mutual understanding by the parties outside the contract allowed the defendant to prevail.

“Where it was undisputed that the agency only received commissions when a trip was completed, the court found that any trips that the agent booked, but were not completed, were not commissions that were ‘definitely determined’ and ‘due and payable,’” Greene said. “It’s a reminder that in unpaid commission cases, any undisputed fact showing an unfulfilled contingency for a commission can turn the plaintiff-friendly Wage Act in the defendant’s favor.”

Alexandra “Sasha” Thaler of Boston said the case shows how important it is for companies to be mindful of the language in their commission plans or offer letters in terms of when commissions are earned and how they are calculated.

In this case, Thaler said, Vacationeer clearly thought carefully about what it was paying for and when it should pay it.

“The contract says the contractor shall be entitled to [a percentage of] gross commissions received by the travel agency for sales of travel services by the independent contractor,” Thaler observed. “It doesn’t say ‘on sales made.’ … This is what I think logically clinched it for the court, even if the court doesn’t say so specifically. Everyone knew the commissions would be based on what the customer pays, not just on the fact that you brought in the deal.”

Boston attorney Barry J. Miller said the court’s approach makes sense in that the fundamental nature of commissions is to allow an employee to share in revenue they generate.

“That time-tested model would cease to be economically viable if an employer could be required to pay out commissions on sums the employer never receives,” he said. “A contrary rule would also provide an incentive for salespeople to originate transactions without regard to the legitimacy of the buyer’s interest or ability to consummate the sale.”

Meanwhile, Elisa A. Filman of Natick detected a potentially appealable issue with respect to a Chapter 93A count brought by the plaintiff.

Campbell had ruled in Vacationeer’s favor on the issue, categorizing the case as a “purely intra-enterprise dispute” between employer and employee that falls outside the statute’s reach.

“While the judge is correct, the decision leapfrogged over the threshold question of whether the plaintiff was an employee or independent contractor,” Filman said. “[Chapter] 93A is viable in the latter situation.”

Commission dispute

Vacationeer generates customer leads for travel packages to Disney World and Universal Studios in Florida.

Disney and other vendors pay commissions to Vacationeer once a customer who books through Vacationeer completes the trip.

Vacationeer outsources its customer leads to “travel planners,” who sell trips to the customers and service each booking through the trip and return date in exchange for a share of Vacationeer’s commission.

On March 25, 2021, Ford signed an independent contractor agreement to become a travel planner with Vacationeer.

The contract stated that Ford would be entitled to 60 percent of gross commissions received by Vacationeer for all bookings that she generated through her own marketing efforts.

Additionally, the contract stated that Ford was entitled to 20 percent of the commission for referral of clients in which the agency serviced the referral but she generated the lead.

Meanwhile, Ford was entitled to 50 percent of the gross commission if the agency provided her the lead.

The contract further stated that within 15 days of the end of each month, Ford would receive an accounting of all commissions earned that were directly attributable to her previous month’s sales, accompanied by payment for her share of those commissions.

According to testimony from Vacationeer’s president, defendant Jonathan De Araujo, travel planners would receive their commission within the first half of the month after the sale was completed and the agency received its commission.

Araujo further testified that the commission was calculated when the agent made the reservation, so that as long as the trip was not canceled, they would know what their commission would be.

The parties do not dispute that Vacationeer did not receive any commissions until a customer completed the trip.

On May 11, 2022, Vacationeer informed Ford by email that her contract was terminated immediately and that all her fulfilled bookings to that date would be paid out as normal at a later date.

A month later, Vacationeer remitted a direct deposit to Ford for $5,432.16, representing her commissions for trips completed as of May 11.

The plaintiff ultimately brought a Wage Act suit in Middlesex Superior Court seeking commissions for trips she had booked as of her termination date but for which travel had not been completed.

Vacationeer moved for summary judgment.

Possibility of cancelation

In granting Vacationeer’s motion, Campbell looked to Gallant v. Boston Executive Search Assocs., a 2015 U.S. District Court case.

In Gallant, a legal recruiter employed by a search firm placed a partner at the Reed Smith law firm in April 2013.

Reed Smith paid the search firm for the placement on June 6, 2013, subject to the condition that the search firm repay Reed Smith a varying percentage of the placement fee should the attorney leave Reed Smith within a year.

The plaintiff legal recruiter was terminated on June 6, 2013, and sued to recover a commission on the Reed Smith placement as wages.

The judge ruled that because the search firm was not, as of that date, entitled to retain the full payment of its fee from Reed Smith, the plaintiff’s commission was not “definitely determined” or “due and payable” and thus did not constitute a commission under the Wage Act.

“The Gallant case is very similar to this case,” Campbell noted. “At the point of the Plaintiff’s termination, Vacationeer was not unconditionally entitled to a commission from future trips that had not occurred, because they were subject to cancellation, for which no commission would be paid. Therefore, the Court concludes that the only commissions due to the Plaintiff on her termination date were for commissions earned and received by Vacationeer up to her date of termination.”

As to Ford’s misclassification claim, Campbell continued, that was irrelevant as to the commissions issue.

“Under either scenario, she had no expectation or entitlement under the terms of the contract to receive any commissions for trips that had not yet been completed as of the date of her termination,” Campbell said.