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Richard, Attorney
Category: Legal
Satisfied Customers: 55599
Experience:  Attorney with 29 years of experience.
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A am a salesman and we have just landed our biggest client

Customer Question

A am a salesman and we have just landed our biggest client ever. My employer has just asked for my resignation, saying that I am an "at will" employee and either one of us can terminate the relationship at any time. The commission would normally be paid over the course of the project as we bill (6% of monthly billings). The project is scheduled for 30 months. He said that he is willing to pay me one month's commission, though he says he doesn't need to.
I believe that he is terminating me to save $450K over 30 months. Do I have a legal case? Should I just accept the offer?
Submitted: 1 year ago.
Category: Legal
Expert:  Richard replied 1 year ago.

Good morning. My name is ***** ***** I look forward to helping you.

Can you provide me a bit more information? Do you have a written contract with your employer or anything in writing concerning commissions? Is there any past course of conduct? Has this new client signed a contract for the project? Thanks.

Customer: replied 1 year ago.
I have an employment contract that states the rate of commission and payment schedule. This is a brand new contract that will double the size of the company's annual revenue. My role is not just sales, but also building alliances with partners. This same week I have signed a major partner contract as a reseller of a software product, and another alliance that I've established will partner with us on the big new contract. My performance reviews over the past 19 months could be rates as a "B".
Expert:  Richard replied 1 year ago.

Thanks for your quick response. Does your employment contract provide any language as to when a commission is earned?

Customer: replied 1 year ago.
Upon termination of this Agreement, payments under this paragraph shall cease; provided, however, that Employee shall be entitled to salary payments for periods or partial periods that occurred prior to the date of termination and for which Employee has not yet been paid, in accordance with Ruota Consulting’s customary procedures."
"This Agreement may be terminated by Ruota Consulting with or without cause upon two weeks written notice, and by Employee upon 45 days written notice." (he has proposed 1 week)
"Anticipated commission calculations for each new SoW introduced by way of your business development efforts, will be provided to you following full execution of the SoW between Ruota Consulting and the client in question. Payment of this commission will be for the duration of the SoW, payable quarterly, based on billed Professional Services to the client, provided that a minimum gross profit margin of 80% has been achieved, otherwise commission will be discounted by 2%, and employment has not been terminated, whether voluntary or involuntary, in which case commission payments cease on exit date." (note that technically the SOW has not been signed, but based on conversations with the client, we anticipate the award with an SOW forthcoming).My employer may be selecting his timing such that the SOW has not yet been signed, but he know that we will get it. Thereby there is no effective commission due at this moment.
Expert:  Richard replied 1 year ago.

Thank you. You absolutely do have a basis to contest this. This is basically how commission work: 1) A commission will be considered “earned” at the time specified in the written employment agreement. 2) If the agreement is silent on the issue, a commission is considered to be earned in accordance with the past dealings between the employer and commission salesperson. 3) If there are no such past dealings, then a commission is considered earned when the commission salesperson produces a person ready, willing, and able to enter into a contract upon the employer’s terms. In your situation, it simply says the the commission "calculations" will be provided following the execution of an agreement. It doesn't specifically say that the agreement has to be signed to be earned. You clearly have produced a company/person ready, willing and able to enter into an acceptable contract. The employer is not now going to be able to circumvent paying you by terminating you before the actual contract is signed. If he doesn't recognize this, you want to not only file suit against him, but also file suit with the Rhode Island Labor Commission.

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