I have a question on a sales commission payment I received on deal involving a company who later filed bk. My employer charged back my commissions because the company made only one of three payments and then filed bk. Nothing in the comp plan states anything regarding bk - only something about returns or debooks. Is their any legal precedent regarding this or do have a legal course to collect this money?
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Commission payment on BK company
- Thread Starter Ryan21
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cbg
Super Moderator
Payout of commissions is determined by state law. Your best bet for the answers to your question since you did not indicate your state, would be your state Department of Labor.
cbg
Super Moderator
I don't know the law in Texas regarding commission pay. But the Texas Department of Labor would.
Unpaid Sales Commissions
I am not an attorney, but have done hundred of hours of research. Here is what you need to look for in your sales compensation plan of record. WHEN WAS THE COMMISSION EARNED? (verse when it is payable). It doesn't really matter when the company actually pays you, but it's more important to establish "at what point in time" is the commission money earned.
Here is the downside from your situation... most companies have successfully proved that sales commissions are not earned until the customer has submitted payment. Many sales people confuse the point at which the company pays you commissions as the point in which it is earned.
If you are working a large strategic sale, be sure to see if you can offer the client a discount for payment upfront. Most sr. level executives will like getting the $$$ upfront, and you protect you sales commissions.
Last point, if you can prove your company somehow did not invoice the customer or deliver services in a timely fashion... i.e. the customer would have paid if your company would have responded in a timely fashion, you might have a small leg to stand on.
I am not an attorney, but have done hundred of hours of research. Here is what you need to look for in your sales compensation plan of record. WHEN WAS THE COMMISSION EARNED? (verse when it is payable). It doesn't really matter when the company actually pays you, but it's more important to establish "at what point in time" is the commission money earned.
Here is the downside from your situation... most companies have successfully proved that sales commissions are not earned until the customer has submitted payment. Many sales people confuse the point at which the company pays you commissions as the point in which it is earned.
If you are working a large strategic sale, be sure to see if you can offer the client a discount for payment upfront. Most sr. level executives will like getting the $$$ upfront, and you protect you sales commissions.
Last point, if you can prove your company somehow did not invoice the customer or deliver services in a timely fashion... i.e. the customer would have paid if your company would have responded in a timely fashion, you might have a small leg to stand on.
As I read in the following link - you mentioned that "at the point in time you secured the contract, delivered the good/svcs and the customer sent payment #1, then the commissions are earned" - saleslaw
http://forums.thelaw.com/showthread.php?t=686&highlight=commission
This is what occurred in my case. After making the initial payment, the customer filed bk. Almost a year later, my company came back after my commissions - deducting 90% of the commission and bonus paid to me on the deal from commissions owed to me. This is still ongoing...their latest point is:
"No court would require employer to allow its employee to retain commissions on revenues never received" and "Return of licenses will be charged back against the sales person who received credit for the revenue" from guidelines - they referenced the letter sent in by the customer regarding BK and notice of cancellation of maintenance…would fall under "Return of licenses" above. No mentioned was made of canceling license or contract. Also, it should be noted that my company added language to the above "return of licenses" in the sales guidelines to include BK and inability or refusal to honor contractual obligations - of course after the fact ...
http://forums.thelaw.com/showthread.php?t=686&highlight=commission
This is what occurred in my case. After making the initial payment, the customer filed bk. Almost a year later, my company came back after my commissions - deducting 90% of the commission and bonus paid to me on the deal from commissions owed to me. This is still ongoing...their latest point is:
"No court would require employer to allow its employee to retain commissions on revenues never received" and "Return of licenses will be charged back against the sales person who received credit for the revenue" from guidelines - they referenced the letter sent in by the customer regarding BK and notice of cancellation of maintenance…would fall under "Return of licenses" above. No mentioned was made of canceling license or contract. Also, it should be noted that my company added language to the above "return of licenses" in the sales guidelines to include BK and inability or refusal to honor contractual obligations - of course after the fact ...
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