Commission Disputes

At the Law Offices of Stewart A. McMillan, we have many clients who are financial industry executives or professionals, most of whom have their compensation linked to commissions. Sometimes whether or not a future sales commission is owed is ambiguous or debatable. If you are considering pursuing a commission dispute, you should consult a New York commission dispute lawyer at our firm.

Commissions are compensation based on a percentage of a salesperson’s sales or orders. The commissioned salesperson is an employee whose primary activity is sales and who is paid, partially or entirely, on a commission basis. This leaves out employees whose primary activity is of an administrative, executive, managerial, or supervisory nature.

Commission disputes often involve former employees trying to obtain unpaid commissions. After a sales executive leaves a company, for example, it may be difficult to get paid on pending deals.

A wide range of factors affect the question of whether a sales commission is owed and how it should be paid. We will need to look at when the sale was completed, what the contract specifies about commissions, whether there was a prior course of dealing related to the payment of commissions by the corporation, and whether the employee was entitled to be paid a commission after leaving the company’s employment. Whether a commission is owed might be a question of company policy. There are situations in which employees in the same position are treated differently. A commission dispute attorney in New York might help an employee bring a claim of disparate treatment.

As of 2007, all employers of commissioned salespeople are required to prepare a written document that provides the terms of employment, including how salary, wages, commissions, and any other amounts earned and payable should be calculated. Under New York Labor Law section 191(c), the written agreement must include detailed descriptions of how payment is to be calculated. Payment can include salary, wages, draw, commissions, and bonuses. These are usually payable if either party terminates the relationship.

A commission is considered earned at the time that the written employment agreement specifies. If an agreement is silent about this subject, the commission is considered earned in accordance with past dealings between the commission salesperson and the employer. If there are no past dealings, the commission is considered earned when the commission salesperson brings forth somebody ready, willing, and able to go into the contract on the employer’s terms. A commission is considered wages under the Labor Law once it is earned, and therefore it is subject to the other rules set forth under the Labor Law. A New York commission dispute attorney can advise you on whether a certain commission will be considered earned.

A recoverable draw is an advance on future commissions. If the agreement provides for a recoverable draw, it should also specify the frequency of reconciliation between a draw and an earned commission. The purpose of this requirement is so that if your employer and you disagree about a commission, the dispute can be identified earlier in the process and resolved. The written agreement should be signed by the employee and the employer.

The written agreement is supposed to be maintained for three years. In other words, employers should keep up the written agreements for a maximum of three years after the employment relationship has been concluded. Employers need to give commission salespeople a statement of earnings paid or due and unpaid, if they request that statement.

An employer’s failure to create a written agreement or update an agreement creates a presumption that the terms of employment as described by the commission salesperson are correct. The New York Department of Labor must take the position that these terms are the terms by which the commission dispute should be governed.

We have more than 25 years of experience advising clients about when commissions have been owed, and when they are required to be paid. If you face a commission dispute, you should consult Stewart A. McMillan. We represent clients in New York City and in Westchester, Orange, Rockland, Putnam, and Dutchess Counties. Call us at 914-358-4326 or contact us via our online form.