Employers Win Round One: Virginia’s Wage Theft Statute Does Not Include Commissions – Will it Last?
Businesses with employees who work in Virginia and are paid by commission received an early New Year’s Eve present when a divided Supreme Court of Virginia overturned a 2024 ruling by the Virginia Court of Appeals that had extended the protections of the Virginia Wage Payment Act beyond wages and salaries to commissions and all other forms of compensation.[1] Groundworks Operations LLC v. Campbell, Record No. 241092 (Va. Dec. 30, 2025)
Justice McCulloch writing for the majority concluded “the language of the [wage theft] statute and its context do not support an interpretation that extends its protections to commissions.”[2]
In 2020, when the General Assembly and Governor were members of the same party, several pro-employee laws were enacted, including an expanded version of the Virginia Wage Payment Act (“Act”), which became commonly known as the “wage theft law.” This law reinforced and clarified several key protections. First, it ensured that upon termination of employment, an employee “shall be paid all wages or salaries due him for work performed.”[3] The Act also provided that “no employer shall require any employee… to sign any contract or agreement which provides for the forfeiture of the employee’s wages for time worked as a condition of employment or continuance thereof.”[4] Under the 2020 changes, a new collective action provision was added that gave new civil remedies to employees who believed their employer had “stolen” their pay.[5] This new version of Act, with its expanded remedies and the ability to recover attorney fees, has generated hundreds of new lawsuits in Virginia against employers in state court over the past five years.
The Groundworks Operations litigation began in Prince William County in March 2023 when five individuals collectively sued their former employer for failing to pay commissions they had earned prior to leaving employment.[6] The plaintiffs were initially paid pursuant to an oral agreement to sell construction services, and in return for securing new business they were to be paid 10% of gross sales, with one-half being paid once the customer’s three (3) day recission period expired, and the balance was to be paid once the job was complete and the customer made final payment. There was often a long delay between securing the contract and the conclusion of construction work done by others to finish project.
In the lawsuit the plaintiffs claimed that they had earned the right to be paid the full commission once the customer signed the agreement and failed to revoke acceptance of the contract within the three-day statutory period as they had completed their duties with relationship to that project. They argued that the commissions due on the new contracts constituted “wages” under the Act for the services rendered. The company refused, as a matter of policy, to pay commissions owed for jobs that remained unfinished on an employee’s termination date. For the lead plaintiff, Campbell, this meant he had not been paid more than $30,000 in commissions on the jobs he had secured but had not been completed when he left in June 2021.
Thereafter, in January 2022, the employer required all employees to sign a new written commission policy as a condition of employment. The written policy under which they agreed that commissions would be paid up to 14 days after the employee no longer worked for the company, but thereafter no further commissions would be paid. When the others left, each of them claimed to be owed $20,000 in unpaid commissions.
The lawsuit claimed violations of Virginia’s wage theft statute, including: (i) refusing to pay earned commissions upon termination of employment as required, and (ii) requiring them to sign an agreement that resulted in a forfeiture of commissions as condition of employment. The trial court granted the employer’s demurrer and dismissed the claims finding that the term “wages” as used in §40.1-29 did not include “commissions.”
As the Supreme Court noted, the pivotal issue was whether Va Code §40.1-29, which expressly addresses “wages” and “salaries,” but makes no mention of “commissions” still incorporated “commissions.” The majority found that the statutory language used was plain and was not ambiguous,[7] and that in common parlance, “wages” are “ordinarily” considered to be distinct from “commissions.” It went on to note that the legislature can and has used the word “wages” to encompass “commissions” in other contexts, either expressly or contextually – but it did neither with this statute. In this regard, majority noted that a number of thoughtful policy arguments had been raised by the plaintiffs and amici for why the wage theft statute “should” also cover commissions, but he responded that it was the job of the Court to administer the law as written, and it is “legislature that is the author of public policy.” Justice McCullough’s opinion plainly invites future legislative action to address this issue.
So, for now, in Virginia no wage theft claim under Va Code §40.1-29 can be brought by an employee seeking to recover unpaid commissions. There are other potential claims available to employees who believe they are owed commissions, but those claims are much less attractive as they do not include the ability to recover liquidated damages and more importantly attorney fees. For example, the lack of a clear, written agreement on how and when commissions are earned and become payable can lead to claims for fraud, unjust enrichment, and/or quantum meruit, which if successful will allow the plaintiff to recover reasonable payment for the value of services rendered. See Fessler v IBM Corp, 959 F.3d 146 (4th Cir. 2020). While the likelihood of these types of claims will be less going forward, employers will still be well served to have a written policies and agreements that spell out when a commission is earned, when it is payable, and what will happen upon termination from employment.
The real question is whether the incoming General Assembly will now amend Virginia’s wage theft statute to include provisions that expressly addresses the payment of commissions. Some states, like North Carolina, require employer to spell out in writing its policies and procedures regarding commissions, and bonuses, and if they are ambiguous the policies will be construed against the employer, and others like Maryland have similar wage theft statutes, and they expressly define “wages” to include a bonus, a commission and fringe benefits, as well as any other renumeration promised for services rendered. Time will tell if last week’s victory for employers is a short-term one, or if it becomes the impetus for legislative action.
If you have questions about how to draft an effective commission agreement or policy, or other issues involving employees, please reach out to any member of our Labor and Employment team.
[1] The earlier decision, which was reversed, is Campbell v Groundworks Operations, LLC, 82 Va. App. 580, 908 SE2d 136 (Nov. 19, 2024).
[2] The Chief Justice and Justice Mann dissented arguing that the “plain and ordinary meaning of the term “wages” includes commission.
[3] Va Code 40.1-29(A) clarifies that such payment must be made on or before the date on which the employee would have been paid for such work had his employment not been terminated.
[4] Va Code 40.1-29(D). In addition, Section 40.1-29(C) prohibits an “employer from withholding any part of the wages or salaries of any employee, except for payroll… taxes, …., with the written and signed consent of the employee.”
[5] The new civil remedies for employees, which included liquidated damages, plus 8% interest and attorney fees. Va Code 40.1-29(G) and (J). Further new criminal exposure was added for employers who willfully and with intent to defraud, or refuses to pay wages, which was based on the value of the wages earned but not paid. Va. Code 40.1-29(E).
[6] Campbell was decided by the Circuit Court on demurrer, so the background facts recited are taken from the allegations in the Complaint as if they are true. Four (4) of the plaintiffs were hired to go door to door and sell construction contracts to customers and paid solely on commission. Campbell was paid to perform limited repairs and then also paid a commission to making other sales to the customers. The Supreme Court did not treat Campbell any different from the other plaintiffs and focused only on his unpaid commissions.
[7] Notably, the Court of Appeals found that the statute was ambiguous on this point, and thus considered guidance issued by the Va Department of Labor in its March 2022 Field Operations Manual, which opined without elaboration that the statute use of the word “wages” included “commissions.” The Supreme Court was “unpersuaded” that this field manual issued by an administrative agency represented a correct statutory interpretation. It is also worth noting that Chief Justice in dissent, like Justic McCullough, found the meaning of the wage theft statute to be “plain” but concluded that the broad remedial purpose the statute meant that the use of the term “wages” was intended to include “commissions.”
