When a salesperson leaves a company, a dispute may arise over commissions connected to sales completed before termination or still pending at the time of termination. The company may argue the commissions were not yet earned, while the salesperson may contend the work necessary to earn them was already completed.
At August Law, our sales commission attorneys help salespeople with commission disputes against former employers.
Does Termination Automatically End the Right to Commissions?
Not necessarily. Florida does not have one statute that decides post-termination commission rights for every salesperson. A Florida law, Fla. Stat. § 686.201, sets payment rules for certain sales representatives who solicit wholesale orders on behalf of a principal, but many commission arrangements fall outside it. For most salespeople, the starting point is the agreement governing their compensation.
The agreement may state when a commission is earned. For example, a commission might become earned when a customer signs a contract, when an order is accepted, when the company receives payment, or when another specified condition occurs.
That distinction can determine whether a former employee is still entitled to payment.
Florida courts have recognized that an employee ordinarily does not forfeit commissions already earned under an employment agreement simply because the employment ends, unless the agreement provides otherwise, requires additional performance, or an applicable business custom affects the parties’ rights.
What Does the Commission Agreement Say?
The language of the compensation agreement may be the most important evidence in the dispute.
Consider a salesperson who secures a customer before termination, but the customer does not pay until several weeks later. If the agreement states that the commission is earned when the customer pays, the company may argue that the commission had not yet been earned when employment ended. The result could be different if the agreement states that the commission is earned when the salesperson obtains the customer’s order.
Post-termination provisions also matter. Some agreements expressly address whether a salesperson receives commissions on transactions that were pending at the end of employment. Others provide that commissions cease upon termination. The enforceability and application of those provisions depend on the specific agreement and circumstances.
What if the Agreement is Silent?
An agreement that doesn’t address post-termination commissions, sometimes called a silent agreement, doesn’t necessarily mean that the former salesperson has no claim.
Florida courts have considered the parties’ conduct and recognized business or industry customs when determining whether commissions remain payable after termination. If your former employer claims no commission is owed but the agreement doesn’t address the issue, an attorney can review your situation.
What Evidence Can Help Prove the Claim?
A former salesperson should preserve documents showing both the terms of the compensation arrangement and the status of the disputed sales.
Useful evidence can include:
- Employment or independent-contractor agreements
- Commission plans and compensation schedules
- Amendments to commission agreements
- Sales reports
- Customer orders and contracts
- Invoices and payment records
- Commission statements
- Emails discussing how commissions are calculated
- Records showing when sales were completed
- Communications concerning termination
- Evidence of how the company previously handled post-termination commissions
What Happens if the Company Refuses to Pay?
A dispute over unpaid commissions may support a breach-of-contract claim when the agreement required the company to pay. The circumstances in these cases can vary widely. A salesperson may have a straightforward claim for commissions that were already earned. At the same time, a dispute over a pending transaction may require interpreting the commission plan and evidence of the parties’ expectations.
A qualified attorney can help identify your options and the strength of a potential case in your specific situation. Contact us online and talk with our legal team at August Law today.