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Tina
Tina, Lawyer
Category: Employment Law
Satisfied Customers: 32721
Experience:  JD, BBA, recognized by ABA for excellence.
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SITUATION: A sales employes resigns from his company. His

Customer Question

SITUATION: A sales employes resigns from his company. His commission plan is such that he gets paid each time the customer pays. The company has a subscription model, where the customer pays each month by automatic charge to a credit card. This continues ad infinitum unless the customer severs the relationship with the company.

QUESTION: Is the sales person entitled to continue to receive commissions on the monthly payments from customers he sold?


CONTEXT: This is what the employment agreement says regarding payment of commissions:

"10% of Standard Pricing direct sales gross collections that Employee initiates and closes for 12 months from the initial purchase order date... Direct Commission is payable within 60 days upon collection"


There is nothing in the employment agreement that specifies one way or the other what happens if the employee leaves of his own volition.


The company is based in California and incorporated in Delaware. The employee is in Massachusetts.
Submitted: 1 year ago.
Category: Employment Law
Expert:  Tina replied 1 year ago.

Hello and welcome.

My name is XXXXX XXXXX my goal is to provide you with excellent service today. Before I can give you an accurate answer to your question, please provide the following additional information:

The employee was working in MA before he resigned? The question is whether the employee is entitled to receive commissions that accrue after the employment relationship is severed?

I look forward to assisting you as soon as I have received this information. Thank you.

Customer: replied 1 year ago.

Yes, that is correct

Expert:  Tina replied 1 year ago.
I see. Thank you for clarifying the situation for me, Craig.

Employees typically stop "earning" commission following termination of the employment relationship unless the employer engages in a wrongful discharge of the employee. However, where the employer's policy of employment agreement to not expressly indicate that commissions are no longer earned following termination, there is typically grounds for an employee to argue that their commissions continue to be earned according to the contract or policy set out by the employer.

Here is a link which summarizes the law on this issue:

http://www.mbbp.com/resources/employment/newsletters/ela/ela1112.pdf

While the employer may have meant that commissions are no longer earned following termination, if that is not indicated in the policy or contract, then a former employee could argue that the continue to be owed commissions according to the policy or contract.

I hope this helps clarify the situation for you. Please remember to rate my service once you have all the information you need so I will be compensated for my time from the deposit you posted with this website. If you have any other questions, please ask me – I’ll be happy to respond. Thank you!

Tina

Customer: replied 1 year ago.

Tina,


 


Thank you for this information. It is reassuring - somewhat (I happen to be the plaintiff in this matter - if that is the correct term for a case brought in small claims court).


 


I'm fully aware that Massachusetts is an employee-friendly state in many ways, and am as familiar as any non-attorney can be with certain aspects of the Massachusetts Wage Act. My concern - and the reason I am writing - is that the employer is a Delaware corporation, and my expectation (based on what my attorney implied) is that the judge will rule based on Delaware wage law, which may not be as employee-friendly as Massachusetts, and Delaware case history. While the Morse Barnes article states that "The majority of other states that have wage payment laws provide that commissions are deemed to be “wages,” and even goes on to provide two examples of cases in the "minority of states...[that have] laws [that] provide that commissions may be forfeited under certain circumstances," it does not specifically mention Delaware's wage laws on commissions.


 


 


It would be reassuring to be able to walk into court with an example of a Delaware case that supports your assertion that "there is typically grounds for an employee to argue that their commissions continue to be earned according to the contract or policy set out by the employer." That is, ideally, what I am looking for, as well as your best determination (I won't hold you to it, of course) on how a judge would likely rule if indeed it is Delaware and not Massachusetts to which he or she looks.


 


 


Craig

Expert:  Tina replied 1 year ago.
Hello again, Craig.

The law of the state where the employee was working should govern the case, not the law where the company is incorporated. The laws where the company is incorporated would typically be irrelevant in a wage claim case concerning an employee. I'm not sure why your attorney would have implied otherwise. Perhaps they are not familiar with wage claims or employment litigation generally.

I don't believe a case from Delaware would aid you at all when appearing in a MA case concerning wages earned in MA. If the wages were earned in DE instead, please let me know and I would be happy to address that situation instead.

Tina, Lawyer
Category: Employment Law
Satisfied Customers: 32721
Experience: JD, BBA, recognized by ABA for excellence.
Tina and 3 other Employment Law Specialists are ready to help you
Customer: replied 1 year ago.

That's what I had originally suspected.


 


My attorney is actually quite experienced in employment law (she helped me get a sizable settlement in a previous case), so it's disconcerting (not for this specific case, of course) that she would have suggested that Delaware law would matter.


 


Anyway, I think I have all that I need, and I thank you for your advice. Well worth it, and I will give you a top rating.


 


 


Craig

Expert:  Tina replied 1 year ago.
Thank you very much, Craig. Perhaps it was a misunderstanding with your attorney. You are very welcome and good luck to you in this matter.
Expert:  Tina replied 1 year ago.

Thank you very much for your positive rating of my service. It has been my pleasure to assist you and I hope you will ask for me should a future legal need arise.

If you receive a Customer Satisfaction Survey from JustAnswer, please consider scoring me a 9 or 10. It benefits my ability to assist you and other customers, and would be tremendously appreciated.

Thanks again and all the best to you.

Tina

Note: Please feel free to request me if you have future legal questions by typing your new question in the question box on my profile page. Here is a link to that page, which you can bookmark or add to your favorites: http://www.justanswer.com/law/expert-tina/. I look forward to hearing from you again should the need arise.

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Tina
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JD, BBA, recognized by ABA for excellence.