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When is an emplyer required to pay sales commissions? Wisconsin

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  • When is an emplyer required to pay sales commissions? Wisconsin

    This is a tricky one, hopefully somebody has some insight.

    I am employed in Wisconsin.

    I am a full time employee.

    I am not an independent contractor.

    I am paid a base hourly rate.

    I am also paid commission on sales.

    The commission rate is progressive.

    The employer has a written pay plan but I was not required to sign it, nor was a copy provided to me. I was given the opportunity to review it during my interview.

    The plan pays us a tiny amount of bonus when we write an order, and the larger sum when the order is delivered.

    No order is ever written without payment, typically in full, occasionally 50%, with the remainder due before delivery.

    A pay stub looks something like this:

    Hours - 80 - $800
    Written sales - tier 5 - $45
    Delivered sales - Tier 4 - $385

    Question:

    When are they required to pay me? When is the rate of commission determined? Are they required to pay me when the invoice is paid to them?

    Most of the time the order is paid in full at the time I write it, but I do not get paid, and the percentage of my commission is not determined until months later at the time of delivery. The issue arises when you have a superstar month and would hit the higher tiers of the commission structure, but it becomes effectively reduced as delivery is subject to a vendors ability to deliver. The deliveries can take 2 weeks or 4 months so that super strong month ends up averaged out over time, and factored against the seasonally slower periods.

    If the employer has received payment in full on an invoice, in the absence of a written agreement stating otherwise, do they not have to pay me the earned commission and earned commission rate during that pay period?

    The reasoning behind this is customer refusals. While a rare occurrence, they do maintain a very liberal return policy and if a customer refuses the merchandise, they do not want to pay the commission, of course.

    Most employers handle these situations with a charge back. A deduction from current pay to cover the return. Not paying until the delivery is complete effectively alters and reduces the effective earned commission structure by averaging out the peaks and valleys over time. It is a ****ty way to pay people, but still my question persists.

    If an employer, of a full time employee (i.e. not an independent contractor), without a signed commission agreement, is paid in full on an invoice, when is the commission earned, when is the rate determined and when is it required to be paid.

    My understanding is that in Wisconsin a sales commission is considered earned at the point I write the deal. If that is the case, can they then legally claim that the commission and the progressive commission rate is only earned when the deal is delivered? Can they claim a lower commission rate because the merchandise was delivered in a different month than it was earned? It would seem that they can not.

    If , in fact, the commission is, by law, EARNED at the time or the sale, but they elect, legally or not, to PAY the commission only on the event of a successful delivery, would they then not be required to track those sales and pay the actual EARNED commission on each specific sale at the time those sales are delivered?

    Can they effectively reduced earned commission rate by only accounting for it as earned at the time of delivery?

    While they do not have a signed agreement I also understand that, neither do I. However, if I am correct, Wisconsin law does address how and when commissioned sales are to be accounted and provides me some rights as an employee.

    I know this may be a bit too complicated for a causal topic on a forum, but any solid advice or referrals to statues is greatly appreciated. I think what they are doing, determining the time and rate of a commission as earned at the event, not of acquisition, invoicing or even payment, but rather the much later event of delivery and delaying payment of earned commissions is illegal.
    Last edited by Reirdon; 02-02-2015, 01:05 AM. Reason: Typos

  • hr for me
    replied
    I can't find a lot, but what I am finding is that it is usually decided upon based on a commission agreement. You would need to get a copy of that agreement that you saw at hire and take it to a local WI attorney or call the state dept of labor. The fact that you are getting a base hourly rate makes it better for the employer since that fulfills some of the wage payment timing laws for minimum wage and overtime. If the agreement states you don't get the commission until product delivery, then they should state how soon after delivery the payment will be made. They are not required to do it the same/next day, but would probably hold it until the next pay cycle/end of month, etc just for administrative purposes. Clawbacks can be an administrative nightmare since it can be hard to recover it, especially if the employee has left the company.

    Unfortunately WI doesn't have a lot on their website that is helpful for something as specific as this example. I did find one blog article that supports what I have stated above: http://smallbusiness.findlaw.com/emp...ly-earned.html But the example they used was from a Maryland court and that may not be helpful in Wisconsin, but it might give you an idea of what could be argued.

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