Double-check all commission agreements! You could be liable for more than you think — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Double-check all commission agreements! You could be liable for more than you think

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in Firing,Human Resources

If you pay commissions under a written compensation plan that covers commissions earned only while the employee works for your company, be careful how you handle terminations—and discussion concerning payment of further commissions.

In some circumstances, you could inadvertently create additional liability for unpaid commissions—especially if you ask the employee to help complete a sale after leaving.

Recent case: Kent Fiebelkorn worked as a salesperson for IKON Office Solutions. Part of his compensation was based on commissions. Those payments were governed by a complex written commission plan that essentially said salespeople get paid for sales they make that are invoiced only while the employee is still employed.

Fiebelkorn was terminated because he did not have a driver’s license (and presumably couldn’t drive to make sales). But at the time, he had several big sales in the pipeline. The company asked him to facilitate those sales with the help of another salesperson. He did and the sales went through. However, IKON didn’t pay him commissions on those deals.

When Fiebelkorn sued, the company argued it didn’t have to pay him under the commission plan’s terms.

The court disagreed. It said that the commission plan ended when Fiebelkorn was terminated—but was replaced by the subsequent agreement that Fiebelkorn would facilitate the sales. That entitled him to commissions he otherwise wouldn’t have been eligible to receive. (Fiebelkorn v. IKON Office Solutions, No. 09-143, DC MN, 2009)

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