“Can I be forced to repay commissions I never received?”

Question: Can my employer take commissions away from me that were paid to another sales representative prior to me even working for the company?

This is the situation: my employer is clearing up old debts, and writing them off before the end of the year. Each territory will be responsible for the commissions already paid even if you were not the person who was paid the commission. This seems very unfair to me since I never got the money in the first place.

Thanks for your help.

(City and State Not Listed)

Answer: Dear Melissa: While on the surface, the answer to your question seems quite simple, it may not be as simple as it seems.     

1. While what is happening to you sure feels unfair, feelings don’t matter: what was agreed previously by you and your employer, if anything was agreed, is what matters. So very often I am presented with situations – like yours – that makes my blood boil, but the “feelings” don’t matter so much as what was agreed to by you and your company. That is the first place to start. Courts say, in effect, “Hey, it’s not for us to decide what is fair, if the employee and the employer previously agreed on what they thought was fair.” So, was anything agreed?

2. The next step is this: is there any written document that shows what you and your employer decided was fair? Employees and employers sometimes decide what is fair in a written document, and that is the kind of evidence we all – including courts – would like to see first. Such written documents may be: (a) an employment agreement; (b) a “welcome aboard” or “offer” letter; (c) a commission plan or agreement that you indicated, by signature or email, was acceptable to you; (d) a company policy book that you agreed to abide by; (e) an Employee Handbook that you confirmed receiving; or (f) something else in writing, even an email. Consider asking Human Resources in an email something like “Did I ever agree to repay monies I never received? If so, was it in writing? If so, can I have a copy?” That’s one place to start.   

3. Read your company’s Commission Plan especially carefully. It is possible that the wording of your company’s Commission Plan, which you agreed governed your commission payments, did say that “a territory is responsible for repayment at a later date.” If so, then it is a bit “gray,” as it said “a territory” and not “you” or “the sales representative for that territory.” And, to my mind, if this is what the Commission Plan says, that “grayness” is still in your favor, because in law, there is a legal principle that says, in effect, “If something is not clear, then it is interpreted against the interests of the drafter, as almost a penalty for being sloppy.” And, too, if it is not “crystal clear” that you understood this provision, then odds are you would not be legally bound to it.   

You might want to quickly read an article I wrote entitled “Commission and Sales Bonus Plans – Read Them or It Will Cost You” by clicking on that title. 

4. If neither you nor HR can find any agreement in writing, consider whether it was agreed to in spoken words; even spoken agreements can be enforceable. Though it is hard to establish if something was agreed to in a spoken conversation, and even harder to determine the precise details of a spoken conversation, sometimes it is possible to do so by, for example, witness, tape recordings or subsequent confirmation in writing.

5. If you did not previously agree to repayment of monies you never received, either in writing or in conversation, then your employer cannot take from you monies you never agreed to pay or repay. The law is quite clear that you must be paid what you have earned. Not less, and surely not less because someone else was paid it. I suggest that, if this is the case, you have a respectful conversation about what happened, and using this information, respectfully request you be paid all you have earned, and not less.

We also offer a Model Letter entitled “Memo Requesting Monies Not Yet Paid by Present Employer.” To obtain a copy [click here].

A thought: You did not mention in your email in what state you live. In most states, the law would provide you with six (6) years to sue on a debt due you; you might consider waiting until either you leave, or it’s “the right time” to make such a request, if you truly fear negative repercussions.

Melissa, it’s hard enough to earn money these days; you should never have to repay money that you never received in the first place . . . unless, of course, you agreed to do so.  

Sorry for your difficulty. I truly hope this helps. Thanks for writing in; please help us by telling others of our blogsite.   

Al Sklover

If you agreed to repay your former employer (a) tuition reimbursement, (b) relocation expenses, (c) a sign-on bonus, or even (d) a short-term loan, you may be able to have that obligation waived and forgiven. To obtain a copy of our Model Memo entitled “Model Letter for Repayment Obligation Forgiveness – with 18 Great Reasons,” just [click here.] “What to Say, and How to Say It.™” – Delivered by Email – Instantly!

© 2011 Alan L. Sklover, All Rights Reserved.