Articles Posted in Commission and Pay Disputes

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It is that time of year again in Georgia. New laws are being proposed and some of them are aimed at the legal justice system. Subcommittees in the House and Senate each heard their own respective versions of legislation to implement a statewide business court. The proposed legislation provides that the court has concurrent jurisdiction and the powers of a court of equity over claims arising under the Uniform Commercial Code, the Georgia Uniform Securities Act and the Georgia Business Corporation Code, among others. Additionally, under the bill, the court has concurrent jurisdiction over certain claims between two or more businesses where the amount in controversy exceeds $250,000, as well as claims involving commercial real property that exceed $1 million. The business court may accept cases that are (1) directly initiated with the court; (2) removed from superior or state court by an agreement of all the parties; or (3) transferred after a party files a petition to transfer and the business court finds by a written order that the case is within its authority. The most recent revision of the bill sets the filing fee at a ridiculously high $1,000 and provides that the judge shall be appointed by Aug. 1, 2019, and the court will begin accepting cases on Aug. 1, 2020. Obviously, the authors of the bill are trying to chill consumers and small business from being able to file lawsuits as a $1,000 filing fee is prohibitive under a lot of scenarios. In addition, who will the sole judge be that sits before business litigants. To put so much influence in one judge does not seem wise. It would be fairer and more just to leave the business cases in the state, superior and federal court systems, which have competently adjudicated over them to date.

The Senate version of the business court’s legislation includes some of the same subject matter jurisdiction as the House bill, but has a lower amount in controversy requirement ($100,000) and expressly lists concurrent jurisdiction in cases involving receivership of businesses, non-competition covenants, and antitrust laws or restraints of trade. Under the senate bill, the business court would commence operations on Jan. 1, 2020, and could begin accepting cases on Aug. 1, 2020. The filing fee for a case in the business court would be $1,000, paid by the party filing the action in the business court or seeking to transfer the case, or by an equal allocation across all parties if they all agree to remove the case to the business court.

As a business litigator in Georgia who regularly handles commission disputes in state and local courts, I am not in favor of a special business court. At least not one that would be mandatory if one party requests removal to it. The state and superior courts, along with the federal courts of the 11th circuit have amply provided recourse for the citizens of Georgia with business disputes for hundreds of years and there is no reason to make an exception for business cases now. For instance, we file many commission disputes and we have never found any of the judges or court personnel lacking in any respect with these types of cases.

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When should you hire a Georgia Commission Dispute Lawyer?

You are working on commission and you are not being fully paid for the sales you have made. Or, your commission plan (the one that your employer made you sign when you agreed to the job) is not being honored by the company. Contrary to what you might believe, it is acceptable, and may be in your best interests, to hire a lawyer to represent you in regard to your commission dispute, even while you still work at the company with whom you are having the pay dispute.

Even though this may be necessary, salespeople are often hesitant to hire a lawyer while still employed for three reasons. First, there is the expense of hiring the lawyer and people often think they can work the situation out on their own. Hiring a lawyer for advice is usually not cheap, but it is often money well spent and can be viewed, in many instances, as an investment or as insurance from being taken advantage of by your employer.  For instance, if you sense that you are going to be terminated and that the company will try to not fully pay your for the commissions owed to you, hiring a lawyer to advise you during this process can prove to be invaluable and well worth the expense. If there is a way to circumvent that situation or to negotiate a favorable payout before (or right after) you are terminated, this is something to consider.  Second, workers fear retaliation for hiring a lawyer to confront their employer.  That is a legitimate fear. But under many statues, an employer cannot retaliate against you for engaging in your legal rights. Often, when you hire counsel and your lawyer assists you in notifying your employer about a possible claim, you are engaging in “protected activity” as the law defines it. And even if your are not, it is sometimes best to hire a Georgia commissions lawyer to advise you behind the scenes to determine how strong your claims for commissions are; or how to structure your situation to put you in the best situation possible to get paid all of the commissions that are due and owed. In addition, if you are protected from retaliation and your company fires you anyway, they have just created an additional claim for you to assert, in addition to the cause of action that you have for the commissions earned but not paid. Finally, many workers simply don’t trust lawyers. While this may be the sad reality, the true fact is that there are many trustworthy lawyers who do their best to protect their clients’ interests and do what is best for the client. The best way to deal with the concern is to interview the Georgia Commission Lawyers and hire the lawyer who you feel comfortable with and trust.

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A commission is an amount of money that is paid to an employee upon completion of a task, usually the task of selling a certain amount of goods or services. It can be paid as a percentage of the sale,  a flat dollar amount based on sales volume, or based on any formula that the employer and employee agree upon. Some jobs are 100% commission based, but the vast majority are not. Most sales jobs will offer you “base salary.” This is what the employer pays you as a based in addition to the money that you earn from your commissions. Employers often use sales commissions as an incentive to increase worker productivity. When a commission is paid in addition to a salary, it may be included in the employee’s paycheck or, paid on a separate schedule, usually bi-monthly or monthly.

Working for commission pay has many advantages for highly motivated and talented salespeople, with the most appealing aspect of this type of compensation plan being that you can leverage the risk to make quite a bit of money, if you are very good at your job. However, the are a lot of risks that come with a position that is heavily compensated by commission. One such risk is that many employers attempt to wrongfully withhold commissions even though they have been earned and are payable to the employee. The most common time this happens is when the salesperson (or account executive, broker or any other of a number of terms used to describe an employee who works mainly on commission) make a sale and then is either fired or quits prior to the commission being paid. While each case is different, most cases require a lawyer to resolve this type of dispute because the basis for the recovery is based on many factors, the law, and the application of the specific facts of the case to the law. A copy of your employment contract, and any commission plan or schedules that you were working under are important first steps in analyzing this type of situation.

We have litigated cases involving these legal issues with small local companies and large multi-national companies alike. Many of the tactics used by these companies are unlawful under Georgia law. Often, the only recourse if you want to get paid is to hire an attorney who knows the laws in Georgia as they apply to unpaid commissions and other monies owed and sue the company for your money.

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Most highly compensated commissioned salespeople work long and hard to obtain results for their company which result in sales and revenue to the company. In turn, the company pays the salesperson a pre-determined amount of the sale in the form of commissions to the salesperson. (Note: I use “salesperson” as a generic term as most large corporations refer to highly compensated salespeople as account executives, financial advisors, consultants, agents, real estate agent, broker, representative, sales rep, etc. No matter what the title, if an employee or 1099 contractor is selling goods or services for a company, they are covered under the laws of Georgia and are entitled to be paid for the sales that have been earned and payable under their agreement with the company).

One of the common situations that we see under this arrangement is when a salesperson leaves the company after a sale is made but before being paid the commissions. Most times in this situation, the company refuses to pay the commission. While each case is different and very fact-dependent, many times the company refuses to pay the commission even though they have no legal basis to do so. In other cases, the company, feeling as if they have the upper hand in the negotiations, offer the salesperson a fraction of what they are owed, and conditions the payment on the salesperson signing a release which releases all future claims against the company for anything that may have happened up to the time of the signing of the release, including the refusal to pay the full amount of the commissions owed. Legal counsel should be sought by anyone who is in this position and is presented with a release, as there are too many potential pitfalls. Sometimes, the release adds additional restrictive covenants that were not in play prior to the signing of the release which restricts the ability of the salesperson to compete against her former employer, or work in certain industries or markets which may be important to her livelihood. This is an especially common tactic when the amount owed is not substantial, since a potential client’s ability to retain legal counsel in these situations is limited due to the amount of money in controversy. In other words, if there is not a lot of money at stake, a law firm such as ours, will not be able to get involved as the economics just do not make sense and the company sometimes realizes this and does not treat the leaving employee fairly.

Many of the clients who we represent in these types of cases work for Georgia corporations but live in other states. However, the most common situation is a client who lives and works in Georgia for an out-of-state large corporation. Choice of law provisions are important in this type of case as the law that applies may determine where the suit can be filed, which states’ substantive law applies and, ultimately the outcome of the case.

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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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