Do I Have A Right To My Unpaid Commissions In New York?
A commission is compensation based on a percentage of the dollar amount of a salesperson’s orders or sales. These wages are commissions regardless of whether the salesperson sells securities, goods, wares, merchandise, services, real estate, insurance, or anything else.
In New York, a commissioned salesperson’s pay agreement or employment agreement must be in writing and signed by both the employer and the salesperson. The commission agreement must include a description of how wages and commissions will be computed and how frequently the employee will be paid.
In New York, commissions are considered wages. There is a six-year statute of limitations to recover unpaid commissions in New York.
If an employee wins a lawsuit for unpaid or underpaid commissions, he or she is entitled not only to the amount of unpaid or underpaid commissions, but also to additional damages equal to 100% of the unpaid or underpaid commissions, interest at the 9% statutory interest rate, and reasonable attorney’s fees.
In my experience, there are several recurring reasons that unpaid commissions disputes occur.
The most common reason is that the commissioned salesperson brings in a sale and the sale has not been entirely consummated at the time that the commissioned salesperson is fired. A dispute arises, between the employer and the employee, as to whether the commission was earned at the time of the termination. Typically, the employer argues that the commission was not earned and thus is not payable upon termination of employment. The employee contends that the commission was earned.
Under New York law, a commission is considered to be earned at the time specified in the written employment agreement. If the agreement is silent on this issue, the commission is considered to be earned in accordance with the past dealings between the employer and the commissioned salesperson. If there are no such past dealings, then a commission is considered earned when the commissioned salesperson produces a person ready, willing, and able to enter into a contract upon the employer’s terms. Once a commission is earned, it is legally considered wages under the New York Labor Law and is governed by all other provisions of the Labor Law concerning the payment of wages.
Employers also often miscalculate commissions earned under contractual formulas. Employers may argue, without merit, that the terms of the commission agreement give them wide discretion to deviate downward from the agreement’s formula for computing the employee’s commissions. In addition, brokerage firms may unlawfully withhold payment of commissions because of pending or possible customer complaints against the salesperson or because of pending or potential regulatory investigations arising from the salesperson’s actions. All of these grounds for withholding or underpaying commissions are unlawful.
If you are an executive or a professional in the New York City metro area and you believe you’ve been denied commissions, bonuses, salary, or other wages that are owed to you, call New York City Unpaid Commissions Attorney David S. Rich at (347) 941-0760 today.
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