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Employment Law Question - Commission payments due upon termination
Posted on 10/28/13 at 1:42 pm
Posted on 10/28/13 at 1:42 pm
Hope someone in here knows about Employment Law. (FWIW, this is in Alabama).
I am in sales. Not 100% commission. Probably closer to 50%-50% between salary/commission. My company pays the commission payments in 25% blocks over 12 months. So, every 3 months, you get 25% of the commission from that sale.
I have had a good year and now I have a large backlog of commissions coming to me, but it will be paid over the next 12 months or so.
My company take the attitude that if I leave, then I am forfeiting those commissions, but I heard from someone else that in Alabama, commissions that you have earned are considered yours and a company can't just keep the commission that you generated. They may be allowed to pay me at the same rate (over 12 months), but they do have to pay.
I can see both sides of the argument, but I would like to know that I am free to leave if I want and still get the money that I am owed.
Anyone have any experience with this?
I am in sales. Not 100% commission. Probably closer to 50%-50% between salary/commission. My company pays the commission payments in 25% blocks over 12 months. So, every 3 months, you get 25% of the commission from that sale.
I have had a good year and now I have a large backlog of commissions coming to me, but it will be paid over the next 12 months or so.
My company take the attitude that if I leave, then I am forfeiting those commissions, but I heard from someone else that in Alabama, commissions that you have earned are considered yours and a company can't just keep the commission that you generated. They may be allowed to pay me at the same rate (over 12 months), but they do have to pay.
I can see both sides of the argument, but I would like to know that I am free to leave if I want and still get the money that I am owed.
Anyone have any experience with this?
3
Posted on 10/28/13 at 1:50 pm to tiger114
This is probably going to be an unpopular opinion, but I would recommend asking a lawyer in real life, and not on a message board.
Posted on 10/28/13 at 1:53 pm to Cold Cous Cous
I am. I have a friend who is Chief Legal Officer. He is reviewing my contract, etc. I was just curious if anyone here had a personal experience.
Posted on 10/28/13 at 2:02 pm to tiger114
Obviously you don't have to answer this, but are you being terminated as in "fired" or are you leaving on good terms, officially "terminating" your employment?
I don't work on commission, but I did read in the handbook for my employer in particular that all commissions are forfeited in the event you are terminated because you violated company policy.
I don't work on commission, but I did read in the handbook for my employer in particular that all commissions are forfeited in the event you are terminated because you violated company policy.
Posted on 10/28/13 at 2:03 pm to tiger114
This seems a little too detail-oriented for anyone to give you a solid opinion either way.
Posted on 10/28/13 at 2:29 pm to dcrews
I am not being terminated. And, I might not even be leaving my company.
I just want to know if they have to pay me if I leave. I get approached by headhunters and competing companies a lot. Just need to know the answer to this to know if I can even consider leaving.
I just want to know if they have to pay me if I leave. I get approached by headhunters and competing companies a lot. Just need to know the answer to this to know if I can even consider leaving.
This post was edited on 10/28/13 at 2:30 pm
Posted on 10/28/13 at 3:04 pm to tiger114
Typically the only commission due you would be for sales that took place while you were an employee. This is my view as an employer. If it's in the pipeline and not sold until after you leave then it's my money and not yours. JMHO.
You would also forfeit future payments if you are no longer an employee.
You would also forfeit future payments if you are no longer an employee.
Posted on 10/28/13 at 3:17 pm to VABuckeye
quote:
You would also forfeit future payments if you are no longer an employee.
This is the part that I am afraid of. My company pays commissions in 4 payments over 12 months, so there will always be some commission still owed. But, right now, they owe me a lot.
Posted on 10/29/13 at 6:32 am to tiger114
Check with your state DOL - there are laws in each state that govern earned income. Commission is clearly earned income - the key is often is it sales commission or residual -i.e. is it from a single sale or are your receiving commission from an account that you sold but the house now handles the sales-
How large is the company? Over 50 employees? If so I would bet they are doing it correctly.
How large is the company? Over 50 employees? If so I would bet they are doing it correctly.
Posted on 10/29/13 at 7:02 am to tiger114
From my experience, if you aren't employed on the dates commissions are paid, you aren't getting those commissions. Sucks, but that's what my experience has been. I've left jobs before and left mucho money on the table.
Posted on 10/29/13 at 8:02 am to 756
We are a 300 employee software firm. I am betting they are doing it right, too, but it would not surprise me to find that they weren't and are just trying to intimidate people into not asking.
Posted on 10/29/13 at 9:16 am to tiger114
I worked for a bank about 6 years ago. Was about 30% salary, 70% commission.
Got laid off along with a lot of others when Lehman collapsed in late 2007. My pipeline was commercial loans primarily. The agreement was I would receive commisions for every deal that closed for the next 30 days. Think it was about $7500 in commissions and they paid me as promised. They sorta dictated the terms to me, but that was fine as 95% of my pipeline was closing in that 30 day period.
Dunno if that helps, but that was my experience.
Got laid off along with a lot of others when Lehman collapsed in late 2007. My pipeline was commercial loans primarily. The agreement was I would receive commisions for every deal that closed for the next 30 days. Think it was about $7500 in commissions and they paid me as promised. They sorta dictated the terms to me, but that was fine as 95% of my pipeline was closing in that 30 day period.
Dunno if that helps, but that was my experience.
Posted on 10/29/13 at 9:32 am to tiger114
quote:
We are a 300 employee software firm. I am betting they are doing it right, too, but it would not surprise me to find that they weren't and are just trying to intimidate people into not asking.
My situation is very similar to yours as I work in software and get commission paid out over a period from 6-18 months. From what I understand, at least with my company, it depends on the state you live in and the laws they have in place.
Posted on 10/29/13 at 10:22 am to GoldenSombrero
quote:
depends on the state you live in and the laws they have in place.
That is what I have heard. I have a lawyer looking at this for me, but he is doing it as a favor for a friend so who knows when I will get his input... hence posting the question here.
Right now, they owe me 6-figures in back commission, but they are sort of being assholes about other stuff. And, I know they are doing this bc they think that I have no choice but to stay. I am not necessarily leaving, but I would love it if they didn't have that leverage on me.
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