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Legality of considering spiff payments as part of salary - not bonus - Michigan

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  • Legality of considering spiff payments as part of salary - not bonus - Michigan

    I work for a company that uses spiff payments from different vendors to compensate our employees. However, I have wondered for a long time if there is anything illegal or unethical that they are doing.

    The way it works is, our company pools spiff payments that come in from the different vendors. For our sales team, the spiffs are paid out according to each salesperson's performance. This is fine; this is what they signed on for and agreed to. However, I do not work in the sales dept., I work in our IT dept. When I first started here about nine years ago, I signed on for a straight paycheck every week. No talk of spiffs, none of that. As the company grew, so did the pool of spiffs, and pretty soon my boss would toss some my way every once in a while - which was considered a "bonus" for me at that point.

    As time went on and I asked for more raises over the years, I was given a couple very small bumps in my base check, which I receive weekly from my employer, but then began receiving spiffs as part of my regular compensation. For example, during a review, my boss would tell me that yes, I'd be getting a raise, but in the form of spiffs. So I would receive these spiffs, and then at tax time I would have to pay the taxes on them under "self-employed" which really ticked me off since I was not self-employed, but that is how I had to file them since that was the box that was filled in by the vendor on the 1099 form. That was back when I had to send away for the spiffs and wait for a paper check to come in the mail; I did that for years.

    Two years ago, I begged my boss to let me out of the spiff program and just give me a straight check with all of my compensation figured in, because I was so tired of chasing down spiff checks and being stuck with self-employment taxes later on. He said he couldn't do that, but what he could do was set me up for "electronic" spiffs which would be electronically included with one of my regular paychecks roughly once a month. This was a huge relief - especially because at that time, they would be already taxed, and therefore, no more self-employment taxes.

    Great! However, the spiffs do not always get paid in a timely manner (similar to the paper spiff problem). I was told I would get one in my check once a month, but that it wasn't a perfect system. This has been a problem for me ever since, because I am supposed to receive $700 in spiffs a month, and when it doesn't show up, it creates a lot of stress for me since my base checks are not quite big enough to cover all of my monthly expenses.

    I apologize for having to explain all of that before getting to the main question I wanted to ask, but I had to because the situation is very confusing (at least to everyone I've explained this to). My question is, because my company considers my spiff payment a part of my compensation and NOT a bonus, are they violating any Michigan comp laws by not delivering that money in a more tightly scheduled manner? I have been told so many times that my money "should" arrive in a certain paycheck, and then it doesn't, so I inquire and am told that it "should" be next week - but no guarantees - and it may or may not arrive. Yes, it does finally show up. It was much worse when I received paper spiffs in the mail; now that I receive them electronically, the maximum delay has been a month. If they are not considering this a bonus, shouldn't they be held accountable when my money does not show up on a consistent basis?

    I have scoured the internet in the past looking for answers, but I can't find any articles that refer to spiffs as part of regular compensation, only as bonuses, and only to salespeople/commissioned employees, which I am not. The company I work for is a well-known retailer in my area, so I couldn't imagine they would practice something outright illegal, but this has always bothered me and I need answers. I have spoken with my boss about alerting me when the money is going to be late showing up, and sometimes he does and sometimes he doesn't. He tells me that it is "out of his control" when the money is going to come and that there is nothing he can do about it, and I ask him to just let me know when it isn't going to come so I can plan; we have gone round and round about this.

    In the meantime, I am looking for new employment. But I am still curious as to whether something illegal is happening here or not. Thank you.

  • #2
    If we look at federal law only (FLSA), you must be paid (at least) minimum wage and you must be paid overtime (if applicable), but nothing else. If the spiffs are being used to cover statutory obligations such as MW/OT, then you have an issue. If the spiffs are being used to cover non-statutory obligations, then likely there is no issue. What you describe is not inherently illegal.

    To look at it other way, we have statutory labor law obligations such as MW/OT, then we have what might be called "agreed to" obligations, which would be covered by Common Law or maybe Contract Law. Statutory labor law violations are pretty straight forward, non-statutory claims are complicated (at best).
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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    • #3
      Originally posted by DAW View Post
      If we look at federal law only (FLSA), you must be paid (at least) minimum wage and you must be paid overtime (if applicable), but nothing else. If the spiffs are being used to cover statutory obligations such as MW/OT, then you have an issue. If the spiffs are being used to cover non-statutory obligations, then likely there is no issue. What you describe is not inherently illegal.

      To look at it other way, we have statutory labor law obligations such as MW/OT, then we have what might be called "agreed to" obligations, which would be covered by Common Law or maybe Contract Law. Statutory labor law violations are pretty straight forward, non-statutory claims are complicated (at best).
      Yes, my company pays me above the minimum wage in my weekly paycheck, and I am salaried so I do not receive overtime pay (I've rarely worked overtime, anyway, so it's never been an issue).

      I figured it was not a cut and dry issue, or an easy one to resolve, but I wanted to find out if there was anything inherently wrong happening that could legally be stopped. Thanks for the info.

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