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Alabama wages involuntarily diverted

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  • Alabama wages involuntarily diverted

    I have been in medical sales in Alabama for the past six years. I am paid salary plus commissions.

    Our commissions are based on what our company actually receives from the third party payors and patients, not on the rates we charge (ususal and customary rates or UCRs). So if I sell products to a patient with Blue Cross and Blue Shield of AL and our UCR is $1000 but our contract with BCBS/AL says only $400 is "allowed" then that's all my company gets paid, it's al I get credit for and what my commissions are based on.

    Continuing with the above example, in the months that follow the insurance company may "adjust" what they paid us for a particular claim and ususally they send us a notice that they overpaid a claim and that we owe them money back. There are times when we get a positive adjustment. In the past, when either of these things have happened, there was also an "adjustment" to the sales rep's numbers AND commissions for the month in which the adjustment took place.

    These adjustments were calculated for each sales rep based on actual adjustments for each person's territory and it was possible to find out why there was an adjustment and what the name of the patient was. If there was a question we could always go to someone at corporate and the question was either answered or it was discovered that the adjustment was an error and the error fixed. Historically, I had very few negative adjustments and usually ended the month with a small positive adjustment. But I think these adjustments were something most reps disliked because for the most part, when you do the math, they ended up with negative adjustments

    Now the company has decided that based on nation-wide and monthly averages, each sales rep will simply be hit with a
    negative adjustment of -3.4%. This is in an effort to simplify things at corporate (which is NOT in Alabama). Can they do that? I know that some states have laws on the books stating that employers may not divert or withhold wages without written permission from an employee or a court order. I know that Alabama does not have this law on the books and is "silent" on this matter. But since the company has corporate offices in AZ and our parent company is in MN, and since the revenue that was supposed to go for payroll is now being redirected/diverted for other purposes, there may be tax collection issues...I could go on and on!

    What do you think about all of this? It just seems wrong to me that they can whack a percentage off across the board every month to every rep in every state. I believe this is outright illegal in some states and I have read cases where plaintiffs have been awarded as much as three times what was diverted. What can I do here in Alabama?

  • #2
    I would suggest you talk to an attorney in Alabama. However, check back & maybe Patty or DAW (payroll people) will come along & be able to answer some of your questions.
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    • #3
      All it looks like to me is that the commission structure is being changed. Employers are allowed to do that.
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      • #4
        Alabama is not my state and there is always the possibility of state specific law that I do not know about. I decided many years ago that I had better things to do with my time then try to learn the laws of all 50 states.

        Also, when we say "law", we are not just talking about statutory law, but also "common law" (court decisions). It is likely that whatever AL statutory law is on this subject, that there might be some type of related court decisions.

        I do agree with Patty's comment that absence a contract to the contrary or a law to the contrary, generally employers can change compensation agreements on a go forward basis only. Retroactive changes are generally illegal, although the 50 states do not actually agree on much of anything.

        Making commission pay a function of actual payments received is both common and legal in most (or all) states). Some of the things you mentioned in your 2nd to last paragraph would make me uncomfortable in CA, but this is really state specific. There is no common set of national rules. The problem is not "diverting wages" per se. Changing compensation agreements on a go forward basis in not diverting wages. But imposing so called costs unrelated to the actual sell gets dicy on the commission agreements in some states. Of course changing the rates (which can have exactly the same effect) generally is legal, so sometimes a legal agreement that accomplishes a particular objective is not all that difficult.

        You might need to talk to an AL labor law attorney directly.
        Last edited by DAW; 07-02-2008, 05:54 AM.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)