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Patrick, Esq.
Patrick, Esq., Lawyer
Category: Employment Law
Satisfied Customers: 12178
Experience:  Significant experience in all areas of employment law.
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I am a commission salesman and a customer of mine just filed . My boss says

Customer Question

I am a commission salesman and a customer of mine just filed for bankruptcy. My boss says I'm responsible for half of the loss but I only get 30% commission on the profits. My contract says "the employee will receive 30% of the gross commission on all consumable and spare part sales. Such commissions shall be calculated on the net amount of sales after deducting returns refunds allowances freight charges discounts bad debts and similar items and shall be deemed to be due and payable only after orders have been actually paid for by the customer."
Do I owe him anything and if so how much?
Submitted: 1 year ago.
Category: Employment Law
Expert:  Patrick, Esq. replied 1 year ago.
Hello and thank you for entrusting me to assist you. My name is ***** ***** I will do everything I can to answer your question. It seems that your commissions are calculated based on "the net amount of sales after deducting. . . .bad debts and similar items..." If a customer is discharging a debt owed to your employer for parts that you sold, that would be a "bad debt." Yyour agreement seems to prescribe that the amount of debt actually discharged in the bankruptcy proceeding would be deducted from "the net amount of sales." Thus, it is conceivable that a large discharge of debt could put you in a position where you need to pay back your employer for commissions you received by did not actually "earn" after this adjustment is factored in. I am not in a position to calculate the precise amount because I do not know all the numbers, but I can tell you that in principle there is a potential repayment obligation here. I hope that you find this information helpful and am genuinely sorry if it is not what you were hoping to hear. Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.
Customer: replied 1 year ago.
I never got a commission on these sales. In fact I didn't make the sales, the company made them direct, I usually get commission only after the customer pays. The total loss was approx. $10,000. The commission on that would be 20% or $2000 and I would get 30% of that or $600. My boss says I'm responsible for half of the cost of goods or $5000.
Expert:  Patrick, Esq. replied 1 year ago.
Thank you for clarifying. The agreement does make reference to "gross" commissions. In other words, "ALL" consumable and spare part sales are added up and then that number is ***** by "the net amount of sales after deducting returns refunds allowances freight charges discounts bad debts and similar items." So, it's clear that commissions are not paid on an indiviudal sale basis but rather than the "commission" is more akin to a percentage of overall company profit. The ambiguity I think is whether "all consumable and spare part sales" means all of YOUR such sales, or all such sales of the company as a whole. This ambiguity would be resolved by what your employer's past practice has been. In other words, if your commissions have always been calculated by adding up all the company's sales and subtracting by all the company's "refunds allowances freight charges discounts bad debts and similar items," then your employer would be entitled to attribute part of this loss to you, even if you did not sell the parts to the customer who is declaring bankruptcy. This is what will determine the answer to your question. I hope this clarifies things.
Expert:  Patrick, Esq. replied 1 year ago.
Was there anything else I can do? Please let me know...

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