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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 12928
Experience:  Significant experience in all areas of employment law.
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I have worked for this company for 19 months now. Its a sales

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I have worked for this company for 19 months now. It's a sales position which has a salary and commission. There are two of us that have this position. The other guy just made one year. So far, neither one of us has made any commissions. I have made over a million dollars in sales and the other guy has done maybe thirty or forty thousand. I have shown up for work every work day possible except one day and a half during the that I had to serve jury duty. I have never been late or went home early. Most of my sales jobs were bids in which the two bosses and I would collectively submit the bid amount. We won about fourteen jobs since the time I started. Today, the Business Manager called me into the office and asked me a question. He asked," What can you sell that can make the company 40% profit?" At that point, I didn't know how to answer him because I didn't know where he was coming from. I told him that I didn't understand the question. He told me that one of the bosses said that all of my jobs was losing money and that he didn't like terminating anybody. I could be placed on commission only or if I said that I didn't understand the question again, I would be terminated.
I will not work there for commission only and I do not feel that I did anything wrong to be terminated. Can you please advise?
Good evening and thank you for entrusting me to assist you. I am very sorry to hear about this difficult position you are in.

Would you be so kind as to clarify your question? Do you want to know whether termination under the circumstances is lawful? Whether you would be entitled to unemployment benefits if you are let go? Or what exactly?

I very much look forward to helping you on this matter.
Customer: replied 4 years ago.

I know that I am in a very difficult position. Through you experiences, does this sound like my boss wants to get rid of me? What are my options? Is termination a better way to go and challenge it so that I would be entitled to unemployment benefits and then seek other employment?


Thank you so much for your clarification. Again, I'm sorry to hear about this situation.

It sounds like your employer is concerned that your work is not profitable for the company. Fair or unfair as that assessment may be, the law affords employers a tremendous degree of control over how they choose to run their business, and generally speaking, employers have the right to terminate or modify the employment relationship (e.g. via transition to "commission only" compensation) if they believe their business will be more successful if they do. Fairness simply does not come into the equation.

As you recognize, this puts you in a very difficult position. You have worked hard and in good faith, but your employer wants to blame the shortcomings of these recent jobs on you. That is not illegal, and so your options are limited.

If you are offered a "commission only" position you can either accept it (which it doesn't sound like you want to do) or you can reject it and apply for unemployment benefits on the grounds that you quit with good cause. Your claim for unemployment benefits would hinge upon the likelihood that a "commission only" compensation structure would result in a significant loss of income. It seems that it would, and assuming you can prove that to be the case, you can demonstrate good cause to have quit which is what you will need to show in order to maintain eligibility for benefits.

Again, based only on the information you have supplied, it sounds like your employer is blaming the profitability of these recent deals on you, and fair or unfair as that may be, they are free to take adverse employment action against you on such basis. It doesn't sound like they want to terminate you, but they do clearly want to modify your compensation structure so as to incentivize you to ensure that the deals you close make money.

If I were in this circumstance, I would probably counter-propose a compensation arrangement that still provided a reduced salary but relied more heavily upon commission. This is a "middle ground," so to speak, in that your employer gets to feel as though they have modified your compensation structure so as to incentivize you to close only profitable deals, but you still get to retain some of the security of a predictable and dependable salary paycheck.

If they are unwilling to compromise, then you can either accept the all commission position or reject it and attempt to collect unemployment benefits on the ground that you quit with good cause. Your chances of collecting unemployment under such circumstances depends on whether you can demonstrate that a commission only compensation structure would result in a substantial loss of income (typically at least 30-40%).

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.

If you do not require any further assistance, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes to you and thank you so much for coming to Just Answer.

It sounds like your employer's concern is that your work is not profitable for the company. However fair or unfair that assessment may be, employers do have the right to terminate employees or modify their salary based on their contributions to the sucess of the company.
Customer: replied 4 years ago.

Thank you for your very professional information and advise. I only have one more question. In Hawaii, at the unemployment office that I visited years ago, I remembered a sign that stated if you quit a job on your own, you will not be eligible for unemployment benefits. Is this true?

Thank you for your reply. Please forgive the errant sentence at the bottom of my answer, which I forgot to edit out of the final draft. My apologies.

Yes, it is generally true that employees who quit are not eligible for unemployment benefits in the state of Hawaii. However, an exception to this principle arises where the employee can demonstrate that they quit for "good cause." The Hawaii Handbook on Unemployment Benefits states that good cause means that there is a "real, substantial, or compelling reason, or a reason that would cause a reasonable and prudent worker, genuinely and sincerely XXXXX XXXXX maintaining employment, to take similar action. Such a worker is expected to try reasonable alternatives before terminating the employment relationship."

As I noted in my previous response, you can quit if your employer insists on an all commission compensation structure and argue that you quit with good cause because such compensation structure would result in a substnatial loss of income and thus constitutes a "real, substantial or compelling reason" to leave the job. Proposing a reduced salary increased commission would allow you to argue that you tried "reasonable alternatives before terminating the employment relationship." Under these circumstances, you chances of getting benefits is reaosnably good.

One final note on commissioned employment. If you are worried about long stretches of no pay whatsoever, rest assured that is generally illegal, even on straight commission with no salary. According to state and federal law, most commissions employees (with the primary exception being "outside salespersons" who principally engage in sales away from the employer's premesis) are entitled to compensation at a rate no less than minimumw wage for each pay period. So, if you didn't earn any commissions in a given pay period or you earned such a small amount of commission that, when divided by the number of hours you worked it is less than minimum wage, your employer would have to make up the difference to pay you minimum wage for that pay period.

Obviously, minimum wage is not much at all, but at least this provides you with some minimal guarantee to get you through the dry spells of no commissions, if you did choose to accept the "commission only" compensation structure.

Again, please feel free to let me know if you have any further concerns. If I have answered your question, I would be very grateful for a positive rating of my service so that I may receive credit for assisting you.

Kindest regards.
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