“Am I entitled to commissions on sales that took place before I was fired, even though they were not yet delivered?”

Question: My part-time job paid me a base salary plus a 3% commission on all sales. I was recently fired due to taking  too much time off for the death of my father and my knee surgery.

Am I entitled to my commissions on sales that occurred before my termination? My boss says if the merchandise wasn’t delivered before my termination, I don’t get any commission. I say this is fraud and he owes me this either now or when the merchandise is delivered.

Who’s right? 

         Wendy 
         Allentown, Pennsylvania

Answer: Wendy, first of all, my condolences to you on the loss of your father. Having lost both of my parents, I sometimes think of the loss of a parent like the loss of an umbrella in a life full of rain.

As to your question: so much in law and in legal rights depends on “the facts,” and that is especially the case when it comes to employees and commissions.

For thousands of years – not that I am that old – employers and employees have argued about when commissions are earned. Is it when the sale is made? Is it when the goods are shipped? Is it when the goods are delivered? Is it when the payment comes in? Is it when the customer no longer has a right to demand a refund? In most instances, and in most states, the answer focuses on “What – if anything – did the employee and employer decide on this issue when they created the employment relation?” 

Though I am not licensed to practice law in Pennsylvania, I have reviewed the law there.

1. Did the Employer and Employee, Themselves, Discuss and Agree on this Issue? Like most states, Pennsylvania law first asks this question: Did the Employer and Employee agree, between themselves, when the commissions would be earned? If so, that is where to look for an answer about when commissions are considered “earned.”
 
2. If there is No Agreement on the Issue, the Law Looks at their Past Practices. Has this issue come up before between you and your employer? Between other employees and your employer? How this has been treated would then be how this instance of non-payment would be treated, as well.

3. If Past Practices are Unclear, Then “Custom and Usage” in the State and Industry will Govern. This is very hard to determine, and Employees and Employers will rarely, if ever, agree on this subject.

4. Fortunately, Pennsylvania Has a Tough, Employee-Friendly Law on the Subject. The Pennsylvania “Wage Payment and Collection Law” (often called the “WPCL”) which can be found in a law library, or online at Title 43 of Pennsylvania Statutes, at Section 260.1 and following sections.  The Pennsylvania WPCL does not create a right to compensation, but helps employees collect compensation when earned. The WPCL covers commission disputes like yours; it considers commissions a kind of “wages” covered by the law.

If, like in your case, there is a dispute about commissions due after employment separation, the Pennsylvania WPCL provides that the Employer must give written notice of the amount of commissions which the Employer concedes are due, and must pay that amount without condition. Acceptance of this amount by the Employee does not constitute a release of the balance of the commissions the Employee claims is still due.

The Pennsylvania WPCL has teeth when it comes to collection. If you are not in agreement with your former Employer about commissions you claim are earned, you can file a Claim with the Pennsylvania Secretary of Labor. If the Employer fails to pay the claim, or fails to explain to the Secretary of Labor why it feels it is not liable for the commissions claim within 10 days of its receipt of notice of the Claim, the Employer may be assessed an additional 10% of the Claim found to be due. You can also go to Court with a Commissions Claim; if successful, you may (no guarantee here) also be awarded attorneys fees, plus penalties.

Perhaps most importantly, under Pennsylvania’s WPCL, the officers of a company who are “active decision makers” can be PERSONALLY LIABLE for all sums due. In especially grievous non-payment matters, officers of an Employer can be held criminally liable for each offense by fine of $300 and imprisonment of up to 90 days. (Now that is teeth!)

5. So, Wendy, What Does This all Mean for You? If you don’t have an agreement or contract with your Employer on this issue, and you can’t come to resolution by compromise, I suggest you tell your employer you now know your rights, and those rights are pretty strong rights, at that. Tell him or her that you will file a WPCL Claim with the Pennsylvania Secretary of Labor, and in that Claim you will ask for all due you, plus penalties over that. Tell your Employer that, if necessary, you may also go to court, because if you win in court you may get your legal fees paid by him or her, too. Tell your employer, too, that he or she could even be held personally liable, and that his or her lawyer will probably back you up on that. As I always suggest, “Say it in writing, and keep it calm and respectful.”

It is my hope that this will be enough to get your Employer to do the right thing. When your employer knows you know your rights – and that other employees may learn them from you – he or she may be more reasonable.

6. What’s the Biggest Lesson? When it comes to commissions, try to get your “agreement” in writing, even if it is in an email, because emails are great proof of agreement.

Hope this helps. Really, really do.

Thanks for writing in!! If this has been helpful, hope you’ll tell others about our Blog.

           Best, Al Sklover

© 2010 Alan L. Sklover, All Rights Reserved.