We have been helping sales executives resolve commission disputes for over 15 years. We focus on representing executives and employees who are owed sales commissions. Call us on NY: 347-305-5294 or contact us to set up a consultation.
What is a commission dispute?
Commission disputes often involve former employees trying to recover unpaid commissions. Once a sales executive leaves a company, they often have a hard time getting paid on pending deals. The story of Gary Linder below will provide insight into how these disputes are resolved.
The Story of Gary Linder and his Unpaid Sales Commissions
Gary Linder sold home security systems for Innovative Commercial Systems (ICS). He worked for ICS for seven years and was paid by commission. A dispute arose after Gary left the company. He had several closed deals pending at the time he left, but ICS refused to pay him. Gary sued ICS for breach of contract.
In New York, once a sales commission is “earned,” its deemed a wage and cannot be forfeited and termination of employment would not affect an employee’s right to receive the commission. So the key issue in Gary’s case, as in many commission cases, is when was the commission “earned”?
When is a Sales Commission “Earned?”
Many companies have written commission agreements that explain when a commission is earned. But Gary’s company did not have an agreement, so it was not so easy to determine when his commission was earned. Gary argued that his commission was earned when he found a ready, willing and able buyer. Ordinarily, in the absence of a written commission agreement, a commission is deemed earned once the sales executive finds a qualified buyer who agrees to purchase. But there was a wrinkle in Gary’s case.
Gary and ICS had established a “course of dealing” over the years. In each case, Gary was not paid once he found a qualified buyer. Instead, Gary was only paid when the customer paid ICS. So the judge held that Gary and ICS had established a course of dealing and therefore his commission was not earned until the customer paid ICS.
This was bad news for Gary because the customers had not paid ICS at the time his employment with them ended. Therefore Gary’s commissions were not “earned” at the time he left and Gary was not able to recover the commissions.
How to Protect Your Right to Sales Commissions
The best way to protect yourself is to work for a company that has a reasonable written commission plan. The commission agreement will determine when your commissions are earned. Study the commission agreement so you understand how it works and avoid companies that impose unreasonable terms.
How to Handle a Commission Dispute
First, make sure you have a copy of the controlling commission agreement. Next, keep records of your transactions so you can demonstrate how you are typically paid. Finally, be sure to maintain detailed records of the commissions in dispute. It is much easier to resolve these disputes if the facts are established. If you cannot resolve the commission dispute yourself, contact an experienced employment law firm that knows how to handle these cases. You can contact us at 212-571-2000.