Legal Question in Employment Law in Pennsylvania
Commission Pay
Can a company change the pay structure of commission based employees? Previously, outside sales reps were paid a bi-weekly draw and commissions on the payables were paid on the 15th of each month less the draw. Last week, we were told that any accounts that went into the 90 day overdue column, would result in not receiving commissions. However, if a company goes into the 90 day column, no legal recourse is being taken. Basically, the company will continue to allow delinquent companies to stay on the books and to continue to purchase our product. Keep in mind, any monies on the receivables are completed sales. Can a company require the sales reps to become collection agents and decide to not pay commission after a certain period of time? I and another sales rep have until 10/31 to collect approximately $45,000 or we will not receive the commissions on the product we sold.
1 Answer from Attorneys
Re: Commission Pay
You asked about a company changing a commission structure.
Simple answer is that the company cannot change the structure for sales that took place under the old scheme. It can change the structure as of a certain date, but only to the degree that sales people are compensated for sales.
In other words, they can't now change your agreement for past sales. They must pay on those as agreed. Further, they can change the agreement for future sales where agents are charged back for uncollectable accounts after a certain period. BUT, when those accounts are collected they must then compensate the agents for those sales in full.
Essentially the company is trying to ply off of an economic reality. As the economy gets worse, both business and consumers are slower to pay bills. But the company can't make a windfall off of that.
Regards,
Roger
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