Articles Posted in Commissions

The New Jersey Wage Payment Law (“WPL”) is an important employment law that requires employers to pay employees their wages on time.  Since August 2019, the WPL has entitled employees whose employers fail to pay them on time to recover not only their unpaid wages, but also up to 200% of that amount as liquidated damages plus their attorney’s fees.

Employee seeks commissions for selling PPEOne question that has been coming up with increasing frequency is when commissions are wages that are subject to the WPL, and thus when unpaid commissions (and belatedly paid commissions) are subject to the liquidated damages and attorney’s fee provisions.

The WPL defines wages to include at least some commissions, as follows:

A less-known New Jersey statute provides protection to independent commissioned salespeople after their contracts terminate.  That law, the New Jersey Sales Representatives’ Rights Act, entitles independent contractors who work as sales representatives to be paid all commissions and any other compensation they earned within 30 days after their contracts terminated or 30 days after their commissions were due, whichever is later.  This requirement applies irrespective of the reason why the contract terminated, including if the sales representative resigned, was terminated without cause, or was terminated with cause.

The statute, which originally was passed in 1990, defines a “sales representative” to be “an independent sales company or other person” who is compensated at least in part by commissions.  It makes it clear its protection applies only to independent contractors, and does not apply to employees.

New Jersey sales representatives entitled to commissionsThe statute further indicates that sales representatives also are entitled to receive commissions on goods that were ordered on or before the last day of the salesperson’s contract, even if the principal (meaning the business or individual who they worked for) did not accept, receive or pay for the goods until after the salesperson’s contract terminated.  The principal must pay the salesperson for any such post-termination commissions within 30 days after the payment would have been due under the contract if it had remained in effect.

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