Can my employers cut my sales commission retroactively?
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Can my employers cut my sales commission retroactively?
I work in a salary plus sales commission job. I sold a very large deal last year which would have paid me a very large amount this year. I just received notice that they will be reducing sales commission on that type of business by 85%, including deals already closed. Among my colleagues this only affects 2 of us, but me more than him. Is it legal? Do I have any
recourse?
Asked on May 3, 2016 under Employment Labor Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
Yes, you could sue for the additional amount you should have been paid under your then-existing commission structure. Commissions may not be cut retroactively: any commissions you earned under a given commission rate must be paid at that rate, and a failure to pay them is breach of contract (even if it was an oral agreement as to the rate). They can certainly reduce your commissions going prospectively, on notice (from the moment of notice forward) for new sales, but that is a very different situation.
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