Sales Commission Due To A Former Employee

          Under New Hampshire law, if an employee or former employee is owed commissions, he may be able to obtain not only those commissions through a lawsuit but also his attorney’s fees and other costs related to obtaining those commissions.  Furthermore, if the employee can show that the employer acted willfully and without good cause, the employee may be able to get an award up to double the amount of commissions owed. 

          The issue that often comes up is whether a salesperson is entitled to commissions for  sales he booked before leaving his employment if the sales orders are shipped and paid for after he left his employment.  Under New Hampshire law, in particular the 1998 New Hampshire Supreme Court case of Bryan K. Galloway v. Chicago-Soft, Ltd., the rule is that a person employed on a commission basis to solicit sales orders is entitled to his commission when the order is accepted by his employer.  The entitlement to commissions is not affected by the fact that payment for those orders may be delayed until after they have been shipped.  This general rule can be altered by a written agreement between the parties or by conduct of the parties which clearly demonstrates a different compensation scheme.  Of course, this does not mean that such a commission will still be owed if the customer does not pay.

          In other words, the commission may still be conditioned upon payment, but it is earned when the employer accepts the order.  Since most employers do not address the effect of termination of employment on sales commissions in their written agreements with their sales staff, this general rule often applies.  The fact that the employer may not pay the sales commission until after the customer pays does not change this general rule that the employee has  earned the commission; it merely establishes when the commission is paid.  An employer who wishes a different rule to apply should have written agreements prepared with guidance from its attorney that clearly set forth that sales staff would not be entitled to any commissions on sales unless they were fully consummated with the customer and paid for prior to  employment termination. 

          If a salesperson has been laid off, fired or resigned and has questions of whether she is entitled to further sales commissions from her former employer, she should speak with an attorney familiar with New Hampshire employment law.