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Commissions Owed in Georgia Form Basis of Lawsuit for Breach of Contract

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.

Robert J. Fleming has been handling commission and pay disputes in Georgia for almost 25  years and has taken some of these cases to trial with great results. He has tried pay dispute cases in Fulton and DeKalb state court and practices in and around the Atlanta, Georgia area including handling lawsuits in Fulton, DeKalb, Clayton, Gwinnett, Cobb and other counties and nearby cities such as Alpharetta, Chamblee, College Park, Conyers, Duluth, Decatur, Doraville, Hapeville, Johns Creek, Jonesboro, Lawrenceville, Norcross, Peachtree City, Riverdale, Roswell, Sandy Springs, Stone Mountain, and Smyrna. If you have been seriously injured and would like to discuss your case in complete confidence, contact Robert J. Fleming directly on (404) 525-5150 or contact us online.