Texas Commission Laws

Under amendments to the commission or bonus agreement, an employee`s conduct – including the decision to continue working after the employer implements the change – may result in the loss of the employee`s rights under the previous plan or agreement. If a business intentionally acts in bad faith and/or attempts to deceive sellers regarding a commission or bonus plan, a seller may be able to make a claim for fraud. However, it is generally more difficult to win a fraud case than a trial based on justice and fairness. It depends only on the facts and circumstances. It`s certainly inherently harder to enforce a verbal commission or bounty agreement just because “he-said,” but you don`t know until you`ve assessed your situation by an experienced lawyer. Don`t lose the thousands of dollars you`ve earned by making assumptions about your rights that might not be correct. Sales commissions and performance-based bonuses make up an important portion of the annual compensation many employees receive in Texas, including those in real estate, financial services, brokerage, private equity, pharmaceuticals, and other sales-related industries. Texas laws protect workers from threats, violence, intimidation or coercion, whether or not they choose to join a union. In other words, the decision whether or not to join a union is yours; You may not be required to join a union or pay dues to a union as a condition of employment, or be refused employment because you joined a union. Barry Hersh, a Dallas employment lawyer, devotes a significant portion of his practice to resolving compensation disputes in Texas, with a particular focus on disputes between employees and employers over unpaid commissions and bonuses.

If you believe you are eligible for unpaid commissions or premiums, complete the company`s online application form. Employees who received commissions but only performed internal sales tasks may also be eligible for overtime pay. The terms “commission” and “bonus” are sometimes used interchangeably by people. The specific word is not important – after all, it is money that in most cases you are paid based on your performance. When we talk about “commissions” on this page, we are referring to the money owed to you for each sale or transaction you have made as an employee. When we talk about a “bonus”, we are also referring to a lump sum that is paid to you at the end of a certain period – sometimes quarterly, annually or in another period of time. Bonuses can be based on your performance, company performance, a mix of both, or a few other factors. In most states, companies have significant discretion to change their commission structures and/or bonuses. However, problems arise when these changes reduce commissions on completed transactions that the employee or independent contractor may have already earned. The employer may get into trouble and/or be held responsible for paying these “earned” commissions. This applies to the State of Texas, as described in the Texas Labor Laws. In Texas, the best situation is to have your commission or bonus compensation plan in writing.

This can be an important factor in deciding whether you will be able to get the employer to pay. Of course, if you have it in writing, you can remove any doubt about the terms of payment of the commission or bonus. There are several other situations that can lead to litigation and legal claims related to Texas labor law. Such a situation occurs when an employer fires a seller or the seller terminates before commissions/bonuses are paid. There are several relevant factors in determining whether or not there is a legal obligation to pay a commission or bonus: For many years, the question was often whether a former employee owed commissions on sales made prior to the employee`s termination. Sometimes employment contracts were unambiguous on this issue, for example by clearly providing that commissions were paid when the employer received payment for a completed sale. Often, however, it was not clear in employment contracts when commissions would be paid to former employees. Over the years, courts have ruled differently and applied different standards to determine whether a former employee is eligible for commissions on sales made prior to termination. On May 20, the Texas Supreme Court ruled in Perthuis v. Baylor Miraca Genetics Laboratories LLC specifies the standard to be applied in these situations.

In general, Texas employers have wide discretion to implement and change the terms of a commission plan or bonus agreement, but generally cannot interfere with an employee`s earned commissions. A common dispute arises when an employer announces changes to an employee`s existing commission plan or bonus agreement, and when an employee is terminated or terminated before payment is made. Disputes also arise if an employer`s bonus/commission plan states that you lose your right to pay commissions or premiums. This happens if you are not an employee/independent contractor on the payment due date. This is generally referred to as the “you must be present to win” provision, as set forth in Texas labor laws. Note that Texas laws do not apply if your workplace is in a federal enclave. Not all federal institutions are federal enclaves. If you contribute to a union under a union safeguard clause, contact us and we will check your employer`s status to see if your rights are being violated. An employee who is denied commissions or bonuses may be able to make a claim for breach of contract and, in certain circumstances, fraud.

Under Texas law, a winning plaintiff represented by an attorney in an infringement action may be able to recover reasonable attorneys` fees, court costs, and interest. In the absence of an explicit agreement or contract, an employee may still be able to recover unpaid commissions or bonuses under the theory of stopping promissory notes or Quantum Meruit. The Texas Supreme Court overturned the appeals court`s decision, holding that in the absence of specific language outlining payment terms in a commission agreement, procurement law doctrine prevails. In doing so, the Texas Supreme Court relied on a 1916 decision that adopted the basic doctrine of procurement in cases involving commissions due to brokers on real estate sales. If you want a story (e.g. in your pay stubs) of the employer paying you a certain commission, this can help confirm the conversation you and the employer had at the beginning of your employment. The Texas Supreme Court has emphasized that parties are free to specify in an agreement what they want, when commissions will be earned and paid, but in the absence of language governing timing and commission entitlement, the basic doctrine of procurement applies. Under this standard, an employee is entitled to a sales commission even after termination of employment if he or she is the immediate income and without the specific income.

Even if a plan is clear, in certain circumstances, a contractor or employee may be able to recover commissions or a cash equivalent under other legal theories. These legal theories are based on the principles of justice and equity. The legal conditions concern damages due to “confiscation of promissory notes”, “unjust enrichment” and/or “quantum meruit”. The Texas Supreme Court decision clarifies situations where an employment contract does not clearly state when a commission will be earned or whether it will be paid after the employment relationship ends. The High Court`s decision expressly states that the “cause of attorney doctrine” is the standard used when commission agreements do not specify when commissions are earned or payable. The decision also states that the employer and employee are free to set their own guidelines for the payment of commissions. One of the lessons of this decision for Texas employers is the importance of clearly stating when a commission will or will not be paid as part of an agreement with a designated employee (for example, commissions are only paid if the employee is still employed at the time of the scheduled payment). If your commission or bonus plan is included in an offer letter, you can read more about offer letters here. If your employer has entered into a collective agreement with a union that requires workers to make payments to or on behalf of a union under the agreement as a condition of employment (often referred to as a “union security clause”), your employer may be violating Texas labor rights laws. If you do not wish to participate in union memberships or dues, but believe that you are obligated to do so, or that you will be sanctioned or lose your job if you do not comply, you can report the situation under Texas` right-to-work laws by contacting the BA. While an employee`s entitlement to unpaid commissions and bonuses requires a case-by-case legal analysis, some general rules may apply: The most common dispute arises when an employee is fired or fired before a commission or bonus payment is due or paid.