Payment of commissions after termination

[MULogger]

I wonder if anyone could advise me on the law in Washington State pertaining to Employee's right to collect commissions following termination of employment. I am employed by a company where I receive a very small amount of base pay with 80 - 85% of compensation coming from commission on work that I perform and bill clients on behalf of our firm. Commission becomes payable to me upon my employer's receipt of cash for those billings.

Last month we received a new employee handbook which states that termination would result in the forfeiture of commissions not received as of the time of termination (e.g. Assume I perform and bill for 100 hours of work in March and my employment is terminated April 1. If payments are received for that work I perfomed on April 15, according to the new policy, I would forfeit the commission on the work I did in March).

This does not seem right to me - can anyone refer me to a legal document that would clarify this for me?

Many Thanks!

[Betty3]

Is that all you have is an employee handbook? Do you have a written commission contract/agreement?

[MULogger]

No Written Commission Agreement

Thank you for the reply.

There is no written commission agreement other than my original offer letter which specified rate and cash basis for accrual. This is a startup company (about two years old now) and the Employee Handbook is an attempt to formalize some of the processes and procedures that have been very loose up until this point.

[Pattymd]

It's possible. The key here appears to be that the plan does not consider the commissions earned until the customer pays; if the customer has not yet paid at the time of your termination, then the commissions would not be due. It is also not uncommon for commission plans to require the employee to be on the payroll as an active employee at the time commissions are actually paid. Some state laws prohibit such plans, though, and I could not find anything on the state web site regarding this issue. You can file a wage claim with the DLI. Maybe it works and maybe it doesn't, but you have nothing to lose by filing. The forms can be found here:
http://www.lni.wa.gov/FormPub/result...e%20%26%20hour

[DAW]

Can I ask what the OP's job duties where and what is the nature of the industry? Also since the OP is apparently selling something, can I ask where and how the sales occur?

(There really is a very good reason for these questions).

[Betty3]

This is the only thing I have re the payment of commissions Wa.
Businesses that use commissioned sales representatives to solicit wholesale orders in Washington must have a written agreement with a sales rep. setting forth how the commission is to be computed & paid. Earned commissions & all other moneys earned or payable must be paid to the sales rep. not later than 30 days after receipt of payment by the principal for the goods sold. Similarly, upon termination of the contract (or the relationship), all earned commissions due to the sales rep. must be paid within 30 days after receipt of payment by the principal including earned commissions not due when the contract was terminated. Also, at the sales representative's option, wages & commissions can be sent through registered mail.
Wash. Rev. Code 49.48.160 & 49.48.170.

MULogger, please answer DAW's questions. Thanks.

[MULogger]

Job Duties

Can I ask what the OP's job duties where and what is the nature of the industry? Also since the OP is apparently selling something, can I ask where and how the sales occur?

(There really is a very good reason for these questions).

Job Duties are to provide Professional / Consulting services to clients on behalf of the firm. The Industry is Information Technology. All Billings are on an hourly basis. The commission represents a percentage of the billed amount to be paid to the consultant upon cash receipt. There is some selling involved to a degree as we are responsible for generating opportunities for work.

*Edit Note Added - There are situations where as a consulatant, I may be involved in securing an agreement for some work to be performed in the future. I understand that this would become a little grey as in our industry the scope and delivery of work is subject to change over time. I am primarily concerned with being paid for work that will have been perfomed and Invoiced to the client as of the time of termination.

Thank you - And thanks to everyone else who has replied.

[MULogger]

.... Similarly, upon termination of the contract (or the relationship), all earned commissions due to the sales rep. must be paid within 30 days after receipt of payment by the principal including earned commissions not due when the contract was terminated. Also, at the sales representative's option, wages & commissions can be sent through registered mail.
Wash. Rev. Code 49.48.160 & 49.48.170.

MULogger, please answer DAW's questions. Thanks.

I think this is the key to my question - I understand when commission payments would be due, but at what point would they be considered "earned"? It seems to mee that they would be earned when work was performed and invoiced.

Thaks again!

[DAW]

Under federal rules (FLSA law), based on what you have said, you do NOT qualify for the Outside Sales exception, and the Retail/Service establishment exception seems very unlikely. That means that you must be paid at least minimum wage and overtime based on all actual hours worked. Federal rules are not very specific on commissions in regards to your specific question.

Your state is not my state, and the other responders know more about your state's specifics then I do. I can repeat Patty's comment. File a wage claim with your state's DOL it works or it does not work. MW/OT claims based on actual hours worked are pretty straight forward. Commission claims are possible but less straight forward, since federal rules defer to the state a lot on this, and all states have different rules from each other. This is often as much a function of court and administrative decisions as it is actual state law.

I could cite the related rules for my state (CA), but learning something as arcane as the commission rules for 49 states that I neither live or work in never struck me as a good use of my time. Sorry about that.

[Pattymd]

Commission becomes payable to me upon my employer's receipt of cash for those billings.

I would interpret that as "earned".

[MULogger]

Thanks for all of your replies!

Thanks to all who responded - this is all good and helpful information. For what it is worth, my employment is not being terminated, but I have been asked to sign off on receipt and acceptance of this document. I am reluctant to do so without understanding the legal implications and you have certainly helped me in this regard.