Commission Deducted by employer

[tradermikel]

I work for a large company that has started deducting commission when a client pays after 90 days. The company I work for has not sent the clients invoices to a collection agency so my employer hasn't recieved any additional costs. This deduction of commission is not practiced in every office just 2 of the local offices here in California. Example: Lets say I sell internet advertising. And a clients ads are posted on the internet and the service was provided as promissed. The customer is happy with the service but is having cash flow problems and delays payment more than 90 days. Does my employer still owe me commission? Grateful for all replys, Mike

 

[Michael Wechsler]

Without knowing anything further, I think it might be a reprehensible breach of contract in bad faith. Commission deals are typically paid out only when the revenues are collected and based upon what is actually collected, e.g. 3% of revenues received, net collection costs. Thus, the incentive you as an employee have in making deals with cash healthy potential clients is the knowledge that you won't be paid the commission if the client doesn't -- and all that work will be for naught.

To refuse your commission because of a late payment is not only unacceptable, it's breach of contract UNLESS otherwise agreed, but I'd find it incredibly difficult to believe anyone would agree to such terms. If they mae a deal with YOU, e.g. 3% of revenues actually received net collection costs, then a breach of payment terms by a third party has NOTHING to do with your contract with your employer. You are paid when money is received, end of story.

The fact that this is a practice in only 2 branches makes me wonder if this was some executive's genius plan to "find" revenue for the company.

 

[saleslaw]

Non-payment... serious issue.

Most companies have successfully argued that sales commissions are not earned unless the customer submits payment. Each state is different.

Whether or not it's 90 days does really matter if it goes to court.... if the customer ultimately pays the invoice, you've earned your commissions.

It's best when working a large deal to engineer a proposal with a large pre-payment upfront, this provides you some insurance against the situation you described.