Does my employer have to pay my commissions if I get fired?
A couple of months ago, I received a phone call from an individual who had just been fired from his job. To maintain anonymity, let’s call this individual “Frank.” Frank was a salesperson for an employer (“Company”) and Frank sold a certain type of product (“Widgets”). Here is what Frank told me:
Frank worked for Company for the last fews years. He was paid a set base salary bi-monthly. In addition, he was paid a certain amount ($0.25) for each Widget that he sold to a customer. Typically, customers would order several hundred Widgets at a time. For example, if a customer ordered 300 Widgets from Frank, he would earn a $75.00 commission for that sale. During the final month in which he was employed, he sold a total of 8,550 Widgets (which would equal an earned commissions totaling $2,137.50). Unfortunately, Frank was fired on the 29th day of the month. When his final paycheck came, Company did not pay him anything for commissions. When Frank e-mailed Company asking for payment, Company said it did not have to pay him because he was not there through the end of the month. Frank then reached out to me to ask whether his employer had to pay him his commissions. Here is what I told him:
The Minnesota Payment of Wages Act (“PWA”), Minn. Stat. § 181.13 governs the payment of wages and commissions earned by employees. It also dictates that when an employer terminates an employees, all wages “earned” became immediately due and payable “upon written demand” by the employee. When an employer fails to pay these commissions, they become liable for not only the commissions earned, but for additional things such as penalties, costs, and fees (the employee’s “damages”). In order to determine whether Frank’s employer was in default, we had to look closely at a number of documents.
We reviewed Frank’s offer letters, payment history, employee handbook, sales spreadsheets, and other materials and determined that Frank had, in fact, “earned” those commissions as defined by statute and his employment documents. As a result, it was clear that Frank’s employer violated the law. Further, because his employer violated the law, they were now on the hook for those other penalties, including my fees. After a few weeks dealing with Frank’s former employer, I was able to get them to pay Frank not only his commissions earned and owed ($2,137.50), but a premium because their violations of law implicated the these other penalties. In the end, Frank walked away with approximately $4,000.00 in his pocket (the employer had to pay my fees in addition to what it paid Frank).
To answer the question of whether your employer must pay your commissions if they fire you, the short answer is “yes, but only if those commissions are “earned.”” Whether they’ve been “earned” depends on a number of considerations. If you believe your employer failed to pay you for all commissions earned, the best thing to do is call an employment attorney or schedule a free consultation. I can be reached at (612) 351-0084.