Sales commissions are payments that are made to sales agents who complete certain sales or who meet various sales quotas. These are typically calculated according to a percentage of the deal that the salesperson completes. Some sales agents are paid solely through commissions, while others may receive a combination of commissions and hourly wages.
Many commissions arrangements are subject to an employment contract. This is because the sales agent and their employer often have to work out several details related to the commissions. These are negotiated and finalized into the employee’s formal contract.
Sales commissions can often be a common source of legal disputes. These can sometimes be highly charged disputes, as a worker’s entire earnings for a month may depend on just a few commissions earnings. Some common sales commission disputes include:
- Employers failing to pay commissions on a completed sale
- Co-workers taking credit for or "stealing" other person’s commissions or sales input
- Disputes over the rate or percentage of commissions
- Various conflicts over employment contract terms
- Violations of state or federal wage laws
- Cases involving discrimination, harassment, or other workplace disputes
A common dispute is where an employee is terminated after they have completed a sale. There is often a delay between the completion of the sale and the actual payment. Payment of sales commissions after termination may require special attention and legal analysis.
Legal remedies for disputes over sales commissions may include:
- Payment of commissions amounts or unpaid wage amounts
- Adjustment of earnings percentages
- Reinstatement to the previous sales position (for instance, if the worker was terminated)
- Change of employment operations policies, especially if discrimination or other violations were a factor
Many types of sales are often subject to very specific federal and state laws. An example of this is with regards to the sale and transfer of securities such as stocks or bonds. Violations in these areas may often involve an investigation from a government agency.
Disputes over sales commissions can sometimes involve some very technical legal issues. It’s often in your best interests to hire a qualified employment attorney in your area if you need assistance with any sales commissions issues. Your attorney can help you when it comes to filing a lawsuit or resolving a dispute through mediation or other means. Also, you may wish to hire a lawyer if you need legal representation when negotiation an employment contract or sales agreement.