Sales Commission - am I required to pay?

Valien

Hi everyone,Here`s a question that I really don`t know the answer to. Am I required to pay commissions to a sales person who no longer works at my company for jobs they closed before they left? We have told the ex-employee that we would honor those commissions but they keep hounding us on this because we haven`t been paid by our clients yet for the work (typically it`s 45-60) days before we get paid.What I would like to find out is if I am required to pay commissions to these employees after they have left our company. I have been told by different sources that we are not required to do so, so I`m just trying to find out some more info.Thanks.~Allen

Blakeman

There is no one answer to this (I`ve been on both sides) and only a legal representative can tell you.  The rest of us are just being anecdotal.If you have a written agreement with the sales person, you need to show that to an employment lawyer.  If your agreement was verbal, you have to share that with the lawyer (and don`t hedge - be totally honest - it`s binding!).  If you have neither, then how you have done business with that sales person over the months/years will be the contract.So if you always paid the commissions for closed business even if your customer didn`t pay you, you can`t change that now.  And if they eventually pay you, and the business was closed before you left, that`s where the lawyer comes in.  I would say you should do business like you always did, and if the sale closed before the person left, you should pay them.You should also take into consideration the greater cost of having your existing sales people and/or ones that might join you later finding out about this.  Nothing amazes me more regarding sales than the short-sightedness of business owners who are williing to anger their existing and future sales staff in order to save a few bucks on one that`s leaving.  What does that communicate to them about how you will treat them?  And how much money do you think it costs you to have them distracted with this?It may not be the legally necessary thing to do, but I`d do everything I could to part ways better than the sales person themselves would even have expected.  It`s a small world.
Blakeman2006-11-15 16:29:55

Valien

Actually, AMD is in my computers. All kidding aside, thanks for the info. We`re definitely not out to screw our employees over (even ex-employees) but also want to make sure we`re doing things the proper way as well.~Allen

hardknocksmba

Most states have laws on this. You need to find the law for your state. In some cases, where it`s a long sales cycle and they did most of the heavy lifting, you are even required to pay commissions on sales that closed after they left.