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Andrea, Esq.
Andrea, Esq., Lawyer
Category: Employment Law
Satisfied Customers: 12554
Experience:  25 yrs. of experience in employment law, real estate and business law, family law, criminal defense and immigration.
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I work at a car dealership where our commision is a percentage

Customer Question

I work at a car dealership where our commision is a percentage of the profit. The dealership adds anywhere from 1000-3200 dollars per car in various "pack" charges that h a ve the effect of raising the cost/reducing the profit and thus the commision of the sales people. At the end of the month they (the management team) put the "pack" money back into the profit column and pay themselves on it after we have been paid. Everybody gets paid onthe net profit. By artificially raising the cost of the vehicle they reduce our pay which increases the net profit they get paid on. Long story short, the pack is supposedly to pay various expense. Those expenses magically disappear after the sales person is paid and the profit goes up by the same amount as the pack. The manager then gets paid on the higher number. Is this legal? Now they want me to sign something that says that I acknowledge that they have the right to "increase the cost of goods and services at anytimeat their sole discretion.
Submitted: 1 year ago.
Category: Employment Law
Expert:  Andrea, Esq. replied 1 year ago.
Hi, my name is ***** ***** I will be glad to Answer your question and the only thing I ask in return is that you leave a positive rating. This will not cost you anything, but it is the only way that the website will give me credit for assisting you, Fair enough ?
You asked,
"Now they want me to sign something that says that I acknowledge that they have the right to "increase the cost of goods and services at any time at their sole discretion."
ANSWER - If the statement that they want you to sign is true and correct and you have actual knowledge that they have the right to increase the cost of goods and services, then you are signing that the statement is true and is within your actual knowledge. The only time that it would not be a good idea for you to sign a blanket statement is when the statement refers to any activity engaged in by the management which is illegal. Then, if you signed it, you might be made out to be just as guilty as the individuals who engaged in the illegal activity,
___________________________________________-
Please be kind enough to leave a positive rating so that the website will give me credit for assisting you.
Positive Feedback and Bonus are always appreciated,
Kindest Regards,
ANDREA
Customer: replied 1 year ago.
I'm not sure what they are doing is legal. They have been artifically been inflating the "cost" of the car which reduces the profit on paper. This extra cost is applied after the car has been reconditioned and prepared for sale. For example, the car is purchased for 10k, they spend 1k on recondioning and repairs, then add 3k to the cost without actually spending any money. Now on paper we own it for 14k. I sell it for 15k and get paid 20 pct of the 1,000 "net profit" after they pay me they remove the 3k expense and the profit is booked at 4000 dollars. The management team gets paid on the 4000 less expenses. One of the biggest expenses is payroll. By artifically reducing the profit they reduce my pay which increases they net profit and the managers check. Ive been at this dealership 20 years and when I started this adjustment was 200 and it seems every time they want a raise they increase it. It went from 2500 to 3200 last year alone. They have been known to do it with trade ins as well. Value it at 2000 knowing its worth 4000, and after the salesman is paid on the deal raise the value to 4000 and book the 2000 as wholesale profit that they dont have to pay the salesperson on. We have no input on what the trade is worth..the sole reason for these actions is to reduce commissions. Our pay plan calls for a percentage of the profit and they are manipulating it. I have always felt this is wrong, maybe even fraudulant. I'm thinking they are now worrying about it and that is why they want the statement signed. It seems to me the cost of inventory is what it cost, not what you think it ought to be. I know an arbitrary cost adjustment wouldnt stand up in a tax audit.
Expert:  Andrea, Esq. replied 1 year ago.
Thank you for your additional information.
I am not an accountant and I am, therefore, not qualified to make any determination about the "book entry" system they use. Manipulating the numbers for their accounting purposes is not necessarily illegal, unless it is done to avoid paying the appropriate tax due on their business income. The fact that they use lower numbers in order to pay less commission to the salesmen is unethical and negatively impacts the morale and loyalty of the salespeople would normally have towards their employer.
However, if you have been with the dealership for over 20 years and your instinct tells you that something is just not right with their numbers and you do not feel comfortable signing whatever it is they want you to sign, then if I were in your position, I would not sign. I would not trust their actions and I would not want to be the scapegoat or "fall guy", if they were ever accused of acting illegally.
You do not have to give them this reason if you decide that you do not want to sign your name to any document which they have prepared for self-serving purposes because you do not want to get on their "bad side" until you find another position. You can simply tell them that you do not feel comfortable signing your name to anything which contains information which you have not personally verified, and just leave it at that,
________________________________________________
Please be kind enough to leave a positive rating so that the website will give me credit for assisting you.
Positive Feedback and Bonus are always appreciated,
Kindest Regards,
ANDREA
Expert:  Andrea, Esq. replied 1 year ago.
Hi, I see that you have had the opportunity to review my Answers, Is there anything else that I can Answer for you. If not, please be kind enough to leave a positive rating. It will not cost you anything, but it is necessary in order for JustAnswer to give me credit for assisting you. Thank you for understanding,
Kindest regards,
ANDREA
Customer: replied 1 year ago.
If using the lower numbers is unethical is it something that would violate employment/wage laws?
Expert:  Andrea, Esq. replied 1 year ago.
Using lower numbers does not violate any employment or wage laws. The dealership is only required to pay the salesmen in one of two ways -
If there is an employment contract that specifies what the salesman will be paid and how the commission is to be calculated, then the employer would have to pay the salesman at least what the contract calls for. But since salesmen normally work on commission, their earnings will be calculated on the price of the vehicles they sell. Yes, if hey reduce the value of the vehicles, then the salesman receives less because the lower value I used to calculate his commission. The salesmen who are affected by this reduced valuation of the vehicles have a right to ask for an explanation as to how their commission was calculated. Unfortunately, there are many business practices which are unethical, but they are not illegal. But, being unethical does not make them illegal. And, since they are not illegal, they do not violate any Labor Laws.
___________________________________
Please be kind enough to leave a positive rating so that the website will give me credit for assisting you.
Positive Feedback and Bonus are always appreciated,
Kindest Regards,
ANDREA
Customer: replied 1 year ago.
Ok, just so I'm sure I understand what your saying, even though I have an employment agreement that says I get paid on the profit, they can just make up a profit number that has no basis in reality and pay me on that number instead of the actual profit?
Expert:  Andrea, Esq. replied 1 year ago.
You stated that
"Everybody gets paid on the net profit. By artificially raising the cost of the vehicle they reduce our pay which increases the net profit they get paid on...."
ANSWER -
The dealer should not be doing this. The problem arises because, apparently, in any agreement that the dealer has with the salespeople, there is no clear definition of how "profits" are to be calculated for purposes of determining what amount is owed to each salesperson.
If such a definition was included in your Agreement with the dealer and the dealer thereafter deviated from the calculation method described in the agreement, the sales people would have a cause of action against the dealer for "Breach of Contract" based on the dealer's failure to follow the steps described in the written agreement with the salespeople. As it presently stands, the Agreement that the salespeople have with the dealer apparently does not contain a clear definition of "profits" for purposes of calculating the salesmen's commission and on which the salespeople could hold the dealer liable. While it is true that the dealer is engaging in unethical practices when calculating "profits" for purposes of the salesmen's commissions, there is nothing "concrete" in the agreement on which the Salesforce can rely for purposes of arguing that they are not being paid the commission which they contemplated when they entered the agreement with the dealer.
In order to correct this, the salespeople would have to get together and present their argument to the dealer en masse because there is always strength in numbers, especially when the individuals have a common interest and a common grievance against the dealer. So, you might try to organize the Salesforce, have a meeting and formally present your grievances to the dealer, using real numbers in order to clearly show the wide discrepancy between the commissions you should be receiving and the amount of the commission which all the salespeople are actually receiving,
___________________________________________
Please be kind enough to leave a positive rating so that the website will give me credit for assisting you.
Bonus and Positive Feedback are greatly appreciated,
Kindest Regards,
ANDREA
Expert:  Andrea, Esq. replied 1 year ago.
Hi, again, I see that you have reviewed the Answers I gave to all of your questions, but you have left no rating for any of them. This results in justanswer giving me no credit at all for my time and effort in Answering all your questions. It would not have cost you anything to leave a positive rating. So, without a rating justanswer will give me no credit, nor any compensation for my efforts. Therefore, I am going to respectfully ***** ***** of your question,
Kindest regards,
ANDREA