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Using SALES Reps to land big contracts then terminating them ? California

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  • Using SALES Reps to land big contracts then terminating them ? California

    I am seeing a trend of Companies hiring SalesReps to build their risidual customer bases - only to terminate them in two years to avoid paying future commissions.

    This has happened to me twice in the past five years.

    I am terminated after I land significant risidual contracts. The Company pays me on the orders that have been fullfilled then THEY NO LONGER HAVE TO PAY COMMISSIONS AND then make them house accounts! They then reap the benefit of all my hard work landing the accounts for the duration of the contract.

    IS THERE ANYTHING THAT CAN BE DONE????? this is so unreasonably UNFAIR.

  • #2
    Not unless you can get the employer to negotiate an enforceable employment contract. And in this economy, I wouldn't be optimistic about that. It's an employer's market.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

    Comment


    • #3
      Well, I am not positive this is correct until I decide to follow through.

      But, I thought I would post this in case anyone finds this post who may be experiencing this. From what I have found its fairly common for employers to do this to avoid paying commission on relationships built on the salemans back! Which I believe should be brought into light. I talked briefly to an attorney yesterday and he said that I MAY have a "wrongful termination" case. He said that most Salesmen just walk away thinking there is nothing that can be done, but the lawyer told me that is not true.

      He mentioned "breach of faith" and something about "fraudulant termination for financial gain" (I cant find my notes - thats not word for word what he said). He said that the Labor Board will have issue's with it as well.

      From what I understand though... proof though is in the pudding, and its not neccessarily an easy climb.

      Comment


      • #4
        Did the attorney say exactly what issue he thought that the CA-DLSE would have with this? I can give you a pointer to their manual, but nothing you have said is ringing any bells (for me anyhow) as far as CA-DLSE is concerned.
        http://www.dir.ca.gov/dlse/Manual-Instructions.htm

        Regarding wrongful termination, does the attorney think highly enough of your case that he/she is willing to take it on a contigency basis? Or is he/she just willing to bill you for how many ever hours you can afford?
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

        Comment


        • #5
          If the terminations are being done specifically for the purpose of seeing that you don't get the commissions, I agree with the attorney.

          If the terminations are done for other reasons and it just happens that the timing is such that the commissions are forfeited, then IMO what kind of a case you could bring would depend on how well the company could support the reason for the termination.
          The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

          Comment


          • #6
            Good faith and fair dealing

            Originally posted by cbg View Post
            If the terminations are being done specifically for the purpose of seeing that you don't get the commissions, I agree with the attorney.

            If the terminations are done for other reasons and it just happens that the timing is such that the commissions are forfeited, then IMO what kind of a case you could bring would depend on how well the company could support the reason for the termination.
            The doctrine of good faith and fair dealing in contractual relations has morphed into many different causes of action, some based on tort law and others based on contractual common law. The ones based on tort law are more fun, because when you sue in tort you can sue for compensatory and punitive damages, where in contract law you can only claim expectation, reliance, restitution, or equitable damages.

            I don't know what the jurisdiction in question recognizes but I would be willing to bet that any cause of action that a salesman in these circumstances might have is not based on any statute.

            If a court were to find that a reason proffered by an employer for a termination were pre-textual they could very likely take umbrage towards the employer’s defense and just find a way to rule in the plaintiff/employees favor.

            Sounds like this guy, and salesmen like him, have a pretty good chance of finding a judge that will be sufficiently pissed off in order to find a way to rule in their favor.

            Eric

            Comment


            • #7
              Where did I say a single word about statutes?

              I agree with you completely. What did I say to suggest otherwise?
              The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

              Comment


              • #8
                Just adding my thoughts

                If I post to a comment of yours it doesnt mean I dissagree with you.

                I was just adding my thoughts to your comments

                Eric

                Comment


                • #9
                  I was going to wait to meet the attorney after the Holidays. I do not remember exactly what was said.

                  Whats interesting is that I am the single solitary sales rep who's sales have grown in the past year. They have/had 4 Reps. I am the only female (as the matter of fact there are no other women in any sort of managerial position- its all men and my immediate superviser the day before my termination told me that my trouble are that the organization is a "good old boys club")

                  My sales base grew by 20%, while all other Reps decreased yet I was the only one "eliminated", dubiously it was within a week of securing a three year sales contract with a HUGE account.

                  My supervisor says they may make me a low ball offer to make me an IC with straight commission at a low percentage.

                  Comment


                  • #10
                    smell test

                    Originally posted by Keston925 View Post
                    I was going to wait to meet the attorney after the Holidays. I do not remember exactly what was said.

                    Whats interesting is that I am the single solitary sales rep who's sales have grown in the past year. They have/had 4 Reps. I am the only female (as the matter of fact there are no other women in any sort of managerial position- its all men and my immediate superviser the day before my termination told me that my trouble are that the organization is a "good old boys club")

                    My sales base grew by 20%, while all other Reps decreased yet I was the only one "eliminated", dubiously it was within a week of securing a three year sales contract with a HUGE account.

                    My supervisor says they may make me a low ball offer to make me an IC with straight commission at a low percentage.
                    This does not pass the smell test. If it smells like a rat, and looks like a rat, and moves like a rat it must be a rat.

                    If I were you I wouldn't let this go. Contract law is what the judge makes of it. It sounds like you have a good case. I hope I live long enough to be allowed to handle a case like yours. I would make the employer cry.

                    Oh boy, how exciting.

                    Eric

                    Comment


                    • #11
                      Sorry if I misunderstood, Eric.
                      The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

                      Comment


                      • #12
                        Update

                        Well I think its important to update:

                        I went to several attorneys (interesting... different answers from each of them) but general consensus was to start by filing a complaint to EEOC to start by obtaining a "Right To Sue" letter and also filing a WAGE CLAIM - with the Department of Labor Standards to address the unpaid wages (to review the unpaid - and not yet due commissions I earned on the two big contracts) and penalties.

                        The DLSE is still waiting for a meeting... so I am not suer how that will go...

                        I did have my intake meeting with EEOC and they accepted the case and have sent a complaint to the Company (They told me that only 56% of the cases even get that far). The EEOC highly suggests that you attend or agree to attend mediations so that the next step.

                        I am not sure what to expect at mediations... he told me typically I throw out some type of settlement # and they accept or debate about it or we move on and I get my "Right to Sue" letter and go on to court. I could tell that he felt I have a strong case, he said it made no sense what they did and I showed him the evidence.

                        How on Earth do I make up a $number settlement to throw out there? they robbed me out of a $100,000 dollar a year (realistically more) job that i had obtained a three year contract on....
                        Last edited by tinker925; 01-28-2009, 11:44 AM.

                        Comment


                        • #13
                          Damages

                          If the employment relationship was a true at will situation damages are tough to determine.

                          If there was some sort of employment contract for a term of years then damages become much easier to figure out. In that sort of problem you would seek, at the very least, expectation damages in the amount that you would have received if the other party had completely performed on their end of the bargain.

                          The issue is this, in contract claims there are no punitive damages. You can only claim expectation damages, reliance damages (money spent in reliance on the promise), restitution damages (more than reliance damages but less than full expectation damages) and specific performance. Specific performance, generally, is only applicable to sales of property, and there only where it is impossible for the court to find a way to put a dollar value on the parties breach.

                          For my money I'd shoot for full expectation damages and then see if they come back with a proposal that includes something called mitigation. Once they have agreed that expectation is going to be the measure you can argue about how much you should have mitigated.

                          Good luck.


                          Eric

                          Comment


                          • #14
                            Thanks Eric,

                            I was definitely an employee... they never actually made me a contractor.

                            I know that I was making roughly $75k a year before I landed these two big contracts that could have at least doubled my wages with a three year contract (with the customer I sold to). I could have easily made $150K TO $200K a year in these commissions.

                            Would it be reasonable if I threw out the wages that I feel I lost with the three year contract I secured with this customer .... say $300 - $500k ?? (that is truky what I would have lost in wages alone) maybe it sounds too high?

                            If they do not agree to that then I will take it to court with my right to sue letter - and an attorney and ask for that with punitave damages as well as my attorneys fees?

                            Am I outta my tree?

                            Comment


                            • #15
                              Originally posted by tinker925 View Post
                              Thanks Eric,

                              I was definitely an employee... they never actually made me a contractor.

                              I know that I was making roughly $75k a year before I landed these two big contracts that could have at least doubled my wages with a three year contract (with the customer I sold to). I could have easily made $150K TO $200K a year in these commissions.

                              Would it be reasonable if I threw out the wages that I feel I lost with the three year contract I secured with this customer .... say $300 - $500k ?? (that is truky what I would have lost in wages alone) maybe it sounds too high?

                              If they do not agree to that then I will take it to court with my right to sue letter - and an attorney and ask for that with punitave damages as well as my attorneys fees?

                              Am I outta my tree?

                              The EEOC right to sue letter refers to your right to sue on a claim of discrimination, not employment contract law. If you have a discrimination claim based on an adverse employment decisions which was based on your membership in a protected class, which obviously you have, that would be one avenue you might take.

                              It is generally accepted that where an employee has earned a commission going forward the employer cannot thereafter terminate the employee in order to avoid paying him the commission he has already earned. We are really talking about good faith and fair dealing in contractual relationships. Many courts hold that when a salesperson has earned the right to a commission an employer cannot arbitrarily terminate that employee just to avoid paying him the commissions in the future that the employee has earned under the employers compensation plan.

                              I would definitely go for the full amount of expectation damages you have outlined. I cannot advise you how to proceed because I am not an attorney, but if your attorney is on board I would think you should go for the gusto.

                              The case law in your jurisdiction is going to control the outcome of your case so, like I’ve said previously, you need to talk to your attorney as he can give you a good idea on how to proceed from here.

                              Good Luck,

                              Eric

                              Comment

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