Court Upholds Chargeback Provision in Employee Sales Commission Contract

Salespeople often work on a straight commission, or a compensation plan that includes both base pay and commission. Employers often find it useful or necessary to advance commissions to salespeople after a sale is made, but before commissions are fully earned. This practice may be standard within a particular industry, necessary to compete with other employers to attract talent, or as a recognition of cost of living pressures, not to mention good employee relations.

But what happens when commissions that have been advanced are not earned, or sales deals that support such commissions fall apart or get cancelled, denying expected revenue to the employer? May an employer charge back the salesperson/employee for advanced commissions in such situations? http://bit.ly/Pn9vA9

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Robert Freedman - Partner at Tharpe & Howell, LLP | Attorney Advertising

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