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  • Straight Commission Ohio

    I am a sales rep for a company and I am on Straight Commission. I get paid based on what my company collects each month and not actual sales. The way the policy reads is if you have been on Straight Commish for 180 days the company will pay you commissions on sales for 90 days following the day you are terminated or leave, as long as the invoice on the order was was paid in full. This only makes sense since I am paid on what is collected so everthing is in the rear. I have been on straight commish for 180 day+. My question is this.....If my territory has orders that are past due because our collection dept can't collect the invoiced amt, etc, can the company take the past due invoice amts out of the commissions they will owe me during that 90 day period after I leave. There is no written policy stating they will do this, but with this company, ya never know. I basically sold the order, got the po and the order was invoiced. All reps help our A/R dept with collecting orders in their respective territories. Any input would be appreciated.

  • #2
    Do you know if you qualify for the Outside Sales exception as defined by the federal FLSA law? If this is true, then there is no minimum wage or overtime requirements. If this is not true, then minimum wage and maybe overtime become issues. This is a key issue that needs to be claried prior to trying to get the rest of the answer to make sense. It is all fine and dandy to say that you are "100% commission", but legally that is only possible if the feds consider you subject to the Outside Sales exception. These are "labor law" considerations that would override contract law considerations.

    Past that, your state is not my state and I do not know what laws (if any) Ohio has on commissions. I can say that this might be a contract law issue, meaning a lawyer would have to read the actual compensation agreement. I can also say that agreements that base compensation on actual payments received are generally not illegal on their face. It is possible to draw up a contract in such a way as to have a bad contract, but even in CA, a state with much more employee friendly laws then most states (incuding OH), it is not difficult to right a legal contract based on cash actually received from sales as long as the FLSA rules are followed.

    I can also say that commission payments related to terminations are very state law specific, meaning different states can and do have very different rules.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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