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Golan Law, P.C.
Protecting Employee Rights In Los Angeles And Southern California

Sales reps, contracts and issues with earned commissions

Road warriors, as sales representatives are often called, spend much of their time traveling and meeting with current or prospective customers.

Sales reps expect to receive commissions according to company policy, but trouble may arise when they try to collect those commissions.

Signing a contract

When a sales representative joins a company, the terms of employment are often set out in contract form. The contract may mention incentives and certain other considerations according to state law. Among the most important contract items from the new employee’s point of view concerns compensation. Some companies pay their sales personnel when a customer signs the sales agreement. Most of the time, however, the road warrior will not receive his or her commission until the customer sends in payment.

Communications between parties

If a legal dispute arises, a contract will be useful in that the court can view the terms. However, if there is no contract between the employer and the sales representative, the court will rely on communications between the two that have developed over time.

Leaving the job

A common legal issue develops when a sales representative leaves the company but has not yet received the commission that was due at the time of his or her departure. The employer may say the customer has not sent payment and, therefore, the employer cannot pay the former sales rep. In this case, the sales rep must challenge the employer’s position on the matter; otherwise, the court can infer that the sales rep is in agreement with the payment policy, and the employer would win the day.

Lack of information

Most sales reps are required to meet the quotas their employers establish and in return, expect to receive the commissions they earn on a timely basis. The agreements they make with their employers will be critical if a legal problem arises about compensation. Some contracts do not contain sufficient details concerning the amount of compensation and the timing of payments to sales personnel, in which case, the employer is often open to liability.

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