Articles Posted in Commission and Pay Disputes

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INTRODUCTION

Many times, disputes over large amounts of money are subject to a contract that is not well written and which is unclear and ambiguous. The question then becomes, how will the Court construe the contract clauses which could decide the lawsuit in favor of the plaintiff or defendant.

APPLICABLE LAW

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One of the legal areas in which I most enjoy practicing is commission disputes. Before going to law school, I spent a few years as an account executive with AT&T selling computer equipment and related telecommunications equipment. During that time, more than half of my income was earned through commissions and bonuses based on a number of complicated commission plans that included commissions based on sales volume and quota attainment and various bonuses. So, I understand how frustrating it is when companies for whom commissioned salespeople work for fail to pay commissions as promised. Successful salespeople work as hard as any professionals I know and they deserve to be paid for all of the sales that they make. The following are the top scenarios that I have seen in Georgia when companies refuse to pay salespeople the full amount of money owed and litigation is imminent.

1. By far, the most common dispute arises when a salesperson quits and leaves the company. Depending on the type of sale, there could be a stream of commissions due for up to a year or longer after departure. Other times, it could be a large payment which triggers commissions due to the salesperson in the future, but after the salesperson has left the company. Many employers take this opportunity to unlawfully withhold commission payments on commissions that were earned and but paid. Absent contractual language to the contrary, this is unlawful. Many times the contract specifically addresses this situation. Other times, it is silent or ambiguous as to who these payments are to be earned and paid.
2. Another common situation which results in a commissions dispute is when a company fires a salesperson and refuses to pay the outstanding commissions unless the employee signs a release and settlement document which hampers her ability to go to work for a competitor. Not only is this not necessary, it puts the salesperson in an untenable position with her formers employee and any prospective employees. If you find yourself in this position, it would make a lot of sense to consult with an experienced commissions lawyer before signing anything that could hurt your legal rights to collect your commissions in the future.
3. Finally, it is common to see a commission dispute when the company pays the wrong person for the sale. Unfortunately for the company, if they paid the wrong person, this does not absolve them from the legal (contractual) obligation to pay the correct salesperson all of the commissions due and owing.
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The following is a reproduction of an actual pleading filed in a business dispute lawsuit to enjoin the other party from continuing its unlawful acts.

IN THE SUPERIOR COURT OF FULTON COUNTY STATE OF GEORGIA
Plaintiff Corporation, Inc., )
Plaintiff,

v.
Defendant

COMPLAINT FOR INJUNCTION AND TEMPORARY RESTRAINING ORDER

Plaintiff files this Complaint and shows the following:

1.

Defendant is a resident of Fulton County, Georgia, and is subject to the jurisdiction of this Court.
2.
Attached hereto as Exhibit 1 is a true and accurate copy of an agreement between Plaintiff and Defendant. Exhibit 1 is incorporated herein for all purposes by this reference. Despite the existence of a valid and enforceable agreement prohibiting Defendant from “soliciting or taking any action to take customers away from XXX ,” Defendant has contacted numerous XXX customers and attempted to persuade them to not do business with XXX . Upon information and belief, Defendant continues this wrongful conduct.
3.
As shown from the facts contained herein, unless defendant is immediately restrained from contacting Plaintiff’s customers, plaintiff will suffer immediate and irreparable injury in that some customers have stated they will use Plaintiff’s competitors instead of Plaintiff after talking to Defendant and other customers will do the same.
4.
Attached hereto is the certificate of plaintiff’s attorney showing efforts to give notice and reasons why notice should not be required.
WHEREFORE, plaintiff prays for the following:
That the Court issue a temporary restraining order prohibiting defendant from communicating with any XXX customers or companies that appeared on any customer lists while Defendant was employed by Plaintiff;
That the Court set down at the earliest possible time a hearing on an interlocutory injunction in this cause;
That upon said hearing in this cause that the Court issue an interlocutory injunction prohibiting defendant from communicating with any XXX customers or companies that appeared on any customer lists while Defendant was employed by Plaintiff;
That upon a final hearing in this cause, that said interlocutory injunction be made permanent;
For such other and further relief that the Court deems just and proper under the circumstances.
This _____ day of _________, 2016.
Respectfully submitted,

__________________

Robert J. Fleming Georgia Bar No. 263475 Attorney for Plaintiff
Katz Wright Fleming Dodson & Mildenhall LLC 2200 Resurgens Plaza 945 East Paces Ferry Road N.E.
Atlanta, Georgia 30326 (404) 923-7497
IN THE SUPERIOR COURT OF FULTON COUNTY STATE OF GEORGIA
Plaintiff Corporation, Inc., )
Plaintiff, )
)
v. ) CIVIL ACTION )
Defendant ) FILE No.

VERIFICATION Personally appeared before me, an officer duly authorized to administer oaths, came __________ who states under oath that she is the authorized corporate representative of the plaintiff named in the above and foregoing Complaint and that the facts contained within said Complaint are true and correct.

_____________________________  Representative

Sworn to and subscribed before me this

____________ day of January, 2016.

_________________________ Notary Public
My Commission Expires:
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Attorney Robert J. Fleming has recently obtained a confidential settlement in a Georgia commissions dispute case. The Firm represented a commissioned salesperson in this dispute which arose when the employee stopped working for the employer. Upon separation, the employer refused to pay full commissions on sales that were made by our client prior to termination, but not yet paid to the employee.

This is a common scenario which we have encountered many times. There are a number of Georgia laws and statutes which require the terminated employee to receive full compensation upon termination. However, the employer frequently takes the position that they will make no more payments upon termination unless the employee signs a “termination agreement” which usually offers a nominal separation payment in exchange for an agreement not to sue or a complete release. From the employee’s perspective, taking this payment is usually not a wise move, even though the temptation is there to take the easy money being offered.
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In April 2009, the Georgia Legislature passed a new law that will allow courts to more easily enforce agreements between employers and employees such as non-competition agreements, non-disclosure agreements, and non-solicitation agreements.

It is currently very difficult to enforce these types of agreements in Georgia, but the proposed new law (which was signed by Governor Sonny Perdue but will not become law unless the voters ratify a constitutional amendment in November 2010 election) would change that drastically.
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Non compete clauses or non-solicitation clauses are governed by O.C.G.A. 13-8-50 to 59. Under Georgia law, restrictive covenants in employment agreements are subject to strict scrutiny and will be enforced only if they are reasonable as to the duration, territorial coverage, and scope of activity of the covenant.

In H&R Block v. Morris, No. 09-11184 (11th Cir. 2010), the Eleventh Circuit addressed a dispute between the well-known tax services company and a former employee who allegedly violated the terms of her employment agreement. The employment agreement contained two restrictive covenants–a non-competition clause and non-solicitation clause. A restrictive covenant in an employment contract, whether a non-solicitation covenant or a non-competition covenant, is considered to be in partial restraint of trade and will be enforced only if it (1) is reasonable, (2) is supported by consideration, (3) is reasonably necessary to protect the restraining party’s interest, and (4) does not unduly prejudice the interests of the public.
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It hasn’t been a great 2010 for Wal-Mart.

Last month, a federal appeals court ruled that a class-action employment discrimination lawsuit against Wal-Mart could proceed. That lawsuit is expected to be the largest such suit in American history, and is expected to include more than 1 million current and former Wal-Mart workers who allege that they suffered gender-based discrimination at the retailer over the past decade. This month, the company agreed to pay up to $86 million in settlement of a lawsuit, which claims that the company failed to pay workers unpaid wages.
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Home Depot has settled a class action lawsuit which alleged that HD violated California’s strict labor laws by not providing its workers with a 30-minute paid meal period after working 5 hours. HD had apparently tried to comply with national labor laws which are chiefly governed by the Fair Labor Standards Act (FLSA).

The settlement shows that many state laws, including many Georgia laws which protect Georgia workers, can form the legal basis for employees to recover for unfair pay practices. While Georgia laws are not as protective of workers as those in California, there are many laws in Georgia which do protect workers and allow for the recovery of back pay, interest, exemplary damages and attorneys’ fees.
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Workers in Georgia who have recently been terminated should carefully consider whether they can continue to be covered under the employer’s healthcare plan and pay only 35% of the normal COBRA premium.

As part of the Stimulus Package that recently have taken effect, involuntarily terminated workers who are let go by March 31, 2010, must only pay 35% of the normal COBRA payment to remain under the employer’s health plan. The balance of the payment is repaid to the employer in the form of a federal tax credit.
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Employers have been negatively impacted by the sour Georgia economy and many have been cutting costs to remain profitable. Unfortunately for many hard-working Georgians, some employers have been cutting costs by offering less (or in some cases none at all) severance packages to terminated employees. As a Georgia lawyer with a great amount of experience representing terminated workers; executives who are not fully paid salary owed to them, and salespeople who are not paid commissions owed to them upon termination, I am seeing a strong surge in the amount of claims related to these areas over the last 2 years. This post focuses on severance pay.

Absent a written contract which requires certain payments upon termination, severance payments are not required in Georgia. However, many employers choose to provide severance packages to terminated employees for a number of reasons. Some companies provide severance pay to garner goodwill with their employees (this goodwill extends not only to the fired employee, but also to the current employees who see how well the terminated employee is treated and, hence, view the employer in a better light). However, some employers use severance payments as a shield against any future liability or waiver of all future claims and lawsuits by the terminated employee. This is where it gets complicated and when you should consult with an experience Georgia lawyer if you are put in this situation.

Many times the employer will offer a severance package and present it to the terminated employee with a “full release of liability.” The offer of severance will be open for a short time and is expressly conditioned on the employee signing the release by the deadline imposed by the employer.

While this may be “good business” for the employer, it may not be in your best interest to sign the release and take the severance being offered. This is a difficult decision that should be discussed with a good attorney to make sure you do not leave any money on the table, or that you do not release valuable legal claims that you may have. Some fired employees may have potential lawsuits related to outstanding commissions that are being wrongfully withheld by the employer, final paychecks which have been withheld, unlawful discrimination, OSHA violations, Fair Labor Standards Act (“FLSA”) violations, or any number of other valuable claims. At a minimum, your potential claims should be discussed with an experienced Georgia business lawyer prior to signing anything given to you.

As a practical matter, most employers provide a 21-day period to review the severance package being offered and the package states that the company urges the terminated to consult with a lawyer. Obviously, the company puts this language in the agreement as a protection against the terminated employee claiming that they did not know what they were signing or did not understand the effect of the document they signed. In most cases, the legal effect of signing the documents that come with a severance package that is being offered to you is that you release any and all claims against the company that you have, or may have in the future related to any conduct of the company up to the date you sign the release. Since this is a broad release, you should be absolutely sure be certain that you know: (1) what potential claims and causes of action you may have based upon your employment; and (2) the money that you are receiving is worth foregoing these causes of action.
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