A ruling by Massachusetts’ highest court has shaken up rules for overtime pay in the state and exposed dozens of dealerships to lawsuits.

More than 100 dealers in the state have been sued over how they compensated salespeople for overtime and Sundays, said Robert O’Koniewski, executive vice president and general counsel for the Massachusetts State Automobile Dealers Association.

Massachusetts law requires employers to pay their workers time and a half for more than 40 hours of work per week, as well as any time worked on Sundays. Many dealers had been using commissions to compensate salespeople for overtime and Sunday pay, based on a 2003 legal opinion by the state.

“There had been a guidance in place for 16 years saying that dealers can do that,” O’Koniewski said.

But a case involving commission-based salespeople at mattress retailer Sleepy’s prompted the Massachusetts Supreme Judicial Court to prohibit draws and commissions from being retroactively applied to overtime and Sunday earnings. “Employees are entitled to separate and additional payments of one and one-half times the minimum wage for every hour” they worked beyond 40 hours or on Sunday, the court said.

Some dealers, including Herb Chambers Cos., had been facing litigation challenging their overtime and Sunday pay policies, but the ruling opened the floodgates for lawsuits against any retailer paying personnel on commission.

The dealership group, which has 52 dealerships, has agreed to settle the pay disputes for $21 million. The Boston Globe first reported the deal, terms of which are now becoming public.

“We always paid our people accordingly to the law, and paid them properly,” Gomes told Automotive News. “Once it became clear that this was not going to get corrected with legislation, it was just time to get back to business.”

Attorneys for Fair Work, the group representing those suing Herb Chambers, did not respond to calls and emails seeking comment.

One-third of the $21 million is going to the attorneys. Up to $100,000 is to be allocated to litigation and settlement administration costs. Up to $50,000 will go toward a dispute fund to address any unforeseen issues that could arise.

The remaining $13.55 million will be paid out to members of the class, based on their length of employment, according to a Web page for the administration of the settlement.

A hearing for final approval of the settlement is set for May 6.

O’Koniewski said the dealer association does not offer legal advice but issued a firm warning to dealers in the state following the court’s ruling.

“When the decision came out, we told them to immediately change your pay plan so that you’re not paying commissions to cover overtime for Sunday pay, to fix things accordingly moving forward,” he said.

Dealerships that paid separately for overtime and Sundays are not affected by the ruling.

Gov. Charlie Baker introduced legislation last year that would have reset pay guidelines to the 2003 guidance, but it went nowhere after a backlash from some pro-worker groups. New legislation is afoot, but details were not available last week.

Meanwhile, special rules for Sunday pay — but not overtime — will be eliminated in Massachusetts by January 2023 as part of “grand bargain” legislation signed in 2018. The Sunday pay multiplier for retail employees is being gradually reduced until then.

Paul Harris, a partner at Burns & Levinson in Boston, said he represents “40 to 50” dealers involved in lawsuits prompted by last year’s ruling. So far, only one client appears ready to settle, although more may end up doing so. In the meantime, many of his clients now close on all or most Sundays.

Gomes said the Herb Chambers dealerships had started closing on Sundays but have since stopped. “That’s part of the spring market and the winter market as well,” Gomes said. “But clearly, as a business operation, you got to control overtime expense, just like anything else.”