FAQs

Why don't some companies pay their sales commissions?

Companies may not pay all of their commissions for all sorts of reasons. Not all of them center on dishonesty. First, many companies have deficiencies in record keeping. These are complicated when sales representatives leave companies. Second, unfortunately, a number of companies may see weakness when a salesperson is separated form the company and will try to take advantage of that situation. Other companies have individuals partly responsible for commission payments that will choose to focus on other issues deemed more important to the company instead of your vapid sales commission.

When should I never sign a separation agreement?

The answer is simple. You should never sign a separation agreement before it is reviewed by an attorney concentrating in this area. Almost all separation agreements will have a provision changing your rights to bring future legal action against the company for some amount of money. Some agreements will have a separate clause allowing for a payment of "earned commissions. An attorney will advise you as to the contractual interpretation of this and many other provisions and help negotiate more favorable language.

What are some of the things a lawyer is looking for when renewing an employment contract?

There are numerous issues that an attorney will study before rendering advice regarding contractual contracts. These include choice of law provisions that indicate which state's law will apply upon interpreting the contract and the ramifications associated with the choice.

Other issues involve restrictions on where an employee can work in the future, future solicitation of business form the existing client base, sales territory borders, incremental commission plans and employee stock options.

I'm a sale representative. What kind of records do I need to keep while employed?

You should keep copies of all employment contracts and updates. In addition, you should prepare for commission disputes well before they arise by maintaining copies of customer orders, invoices and commission reports. The best way to keep these documents is electronically. Make it a habit to regularly scan these materials into your home computer on PDF. Keep an electronic file system of documenting your sales.

If I believe my company is preparing itself to terminate me, how can I best prepare myself for that event?

You should immediately secure a copy of any document you signed upon being hired. This will inevitably include employment agreements and possible supplements. Additionally, you should secure copies of employment handbooks. Then you should have those reviewed by an employment lawyer right away.

In today's day and age, fewer and fewer employees are actually terminated. Most are forced to voluntarily resign, leading to separation agreements, which should be negotiated and reviewed by attorneys. Numerous issues become important such as a clean record, a positive reference and ownership of future rights to solicit known clients.

Finally, you want to secure all records, which would evidence your entitlement for future sales commissions and other bonuses. Being terminated isn't the end of the world and preparation for a smooth transition is a key.