Sometimes, in order to save money, an employer will try to shortchange a commissioned employee and pay less than the full commissions earned per the parties’ arrangements. Worse, some employers will fire a commissioned employee after the employee earns a commission but before the commission is paid. This is more likely to occur when the commission at issue is large, and the employer is focused on short-term thinking, i.e. perceived cost-savings of not paying the full big commission (while disregarding the big-picture problem of firing an employee capable of making even more big sales).
Some employers who do this, knowing there could be legal problems, present the shortchanged employee with a contract and/or severance agreement in the case of a discharged employee. Typically, the contract or severance agreement seeks to get the employee to accept a much lesser payment than the full value of the commission and/or other income lost as a result of the discharge.
If you have been shorted on a commission and/or fired by an employer looking to avoid paying you your full commission, please know you may have strong legal rights. It is important to examine your potential rights before you sign a severance agreement, as most severance agreements will waive potential legal claims.
What legal rights might you you have? I represent workers across the U.S. with unpaid wage claims, and there can be quite strong claims, depending on the State, circumstances and commission arrangement or contract. In Wisconsin, for example, there are a number of legal claims that potentially provide strong legal rights to someone who has not been paid earned commissions. These claims may include breach of contract claims, wage claims under Chapter 109 of the Wisconsin Statutes, equitable claims, or other important case-law rights (e.g. Phillips v. US Bank) that hold companies responsible for discharging commissioned employees or otherwise trying to reduce their commissions.
If you suspect you may have legal rights, you should consider discussing the matter with an attorney before taking action on your own. Some attorneys, including myself, offer free consultations to evaluate commissioned employees’ situations and determine if there are legal options and/or negotiation leverage worth exploring.