The Covenant of Good Faith and Fair Dealing: Wrongful Termination to Avoid Paying Commissions in Massachusetts
Under Massachusetts law, an employer cannot fire you simply to avoid paying your earned commissions or vesting stock options. Violating this "Covenant of Good Faith" allows employees to sue for lost compensation and potentially triple damages under the Wage Act.
Imagine working relentlessly for six months to close the largest software deal in your company's history. You bring in millions of dollars in revenue, and your expected commission check is massive. But just three days before the deal officially closes or the commission is scheduled to be paid, you are suddenly terminated. Your employer claims you are an "at-will" employee and they have the right to fire you at any time. They tell you that because you are no longer employed, you forfeit your commission.
This is a common, unethical tactic used by greedy corporations-and in Massachusetts, it is highly illegal. Every employment contract in the Commonwealth, whether written or implied, contains an invisible, unwritten rule called the "Covenant of Good Faith and Fair Dealing." This legal doctrine explicitly forbids employers from terminating an employee merely to deprive them of compensation they have already earned. If you are a B2B sales rep, a real estate agent, or a high-level executive who was fired right before payday, this guide will show you exactly how to invoke Massachusetts law to get your money.
The Fortune Doctrine: Protecting Your Hard-Earned Money
The foundation of this legal protection comes from a famous Massachusetts Supreme Judicial Court case: Fortune v. National Cash Register Co., 373 Mass. 96 (MA Supreme Judicial Court 1977). In this case, a salesman was fired right after securing a massive contract, simply so the company could avoid paying him his commission. The court ruled that firing an employee in bad faith to steal their earned compensation violates the covenant of good faith and fair dealing. This became known as the "Fortune Doctrine."
This protection was later expanded by Gram v. Liberty Mutual Insurance Co., 384 Mass. 659 (MA Supreme Judicial Court 1981), which established that even if an employer terminates you without malicious intent, they still cannot unjustly enrich themselves by keeping the financial fruits of your past labor. If you did the work, you are entitled to the payout.
Common Scenarios in Massachusetts
The Fortune Doctrine applies strictly to compensation related to past services. It does not protect future, unearned wages. Here is how courts evaluate specific termination scenarios.
Fired Just Before a Massive Commission Closes
If you are a medical device sales rep in Boston and you have completed 95% of the work required to close a massive hospital contract, your employer cannot fire you right before the final signature to keep your commission. If your past labor directly resulted in the sale, the court will likely order the employer to pay you the commission you generated, regardless of what the company's internal commission policy states about "must be employed on the date of payout."
Executives Fired Right Before Stock Options Vest
Many executives and tech workers in Cambridge receive compensation in the form of stock options or Restricted Stock Units (RSUs) that vest on a specific cliff date. If you have worked at the company for 360 days, and your employer fires you on day 361 just to prevent your 1-year stock cliff from vesting on day 365, this is a glaring violation of the covenant of good faith. The court can award you the financial equivalent of the shares you were maliciously prevented from vesting.
Terminations Before Annual Bonuses Are Distributed
Bonuses are tricky. If a bonus is purely discretionary (e.g., a holiday gift), the Fortune Doctrine usually does not apply. However, if your bonus is tied to an objective metric-such as hitting a $1M sales quota or achieving a specific departmental profit margin-and you have already hit that metric, the bonus is considered earned compensation. Firing you in December to avoid paying a mandatory performance bonus in January is a clear breach of good faith.
Filing Deadlines and Action Steps
If your employer stole your commissions, you may actually have two separate claims: a common-law claim for breach of the covenant, and a statutory claim under the Mass. Gen. Laws ch. 149, § 148. The Wage Act is incredibly powerful because if your commissions were "definitely determined and due," the court will force the employer to pay you triple damages (treble damages) plus your attorney's fees.
To pursue a Wage Act claim, you must first file a complaint with the Office of the Attorney General, Fair Labor Division, Boston by submitting Form Wage Complaint, Massachusetts, Office of the Attorney General, Fair Labor Division Wage Complaint Form. After filing this, you can obtain a "Right to Sue" letter and file your civil lawsuit in a court like the Worcester County Superior Court, Worcester. The statute of limitations for Wage Act claims is strictly 3 years. Because massive sums of money are on the line, you should browse our directory of US Lawyers to hire a relentless employment litigator to demand what you are owed.
Frequently Asked Questions (FAQ)
What if my employment contract says I forfeit all unpaid commissions upon termination?
In Massachusetts, employers cannot use clever contract language to bypass the covenant of good faith or the Wage Act. If the commission was already earned through your past labor, a clause forcing you to forfeit it is generally unenforceable.
Do I have to prove my boss intentionally fired me to save money?
No. While proving bad faith (malice) makes your case stronger, the "Gram" precedent states that even if the termination was just a routine corporate layoff, the company cannot unjustly enrich itself by keeping commissions generated by your past work.
Can I sue if I was fired before completing a sale?
If you only made a few cold calls, probably not. But if you were on the "one-yard line" and had completed substantially all the work necessary to close the deal, courts will generally protect your right to the commission.
Are severance packages subject to the good faith covenant?
No. Unless you had a specific contractual guarantee of severance pay, an employer does not violate the covenant of good faith by refusing to offer you a severance package when you are terminated.
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