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.
The 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.
In addition to entitling sales representatives to be paid their commissions and other compensation, the New Jersey Independent Sales Representative Act entitles covered sales representatives to recover “exemplary damages” equal to three times the commissions owed to them. In other words, a sales representative who prevails under the statute is entitled to receive the extraordinary remedy of quadruple damages (his or her actual commissions damages, plus triple those damages). Further, a sale representative who wins a case under the Act is entitled to recover his or her reasonable attorneys’ fees and court costs from the principal.
Notably, the Act applies to sales representatives who are located in New Jersey even if the principal they worked for is located out of state. The law also deems any agreement that attempts to waive a sales representative’s rights under it, including any provision attempting to apply another state’s law, to be unenforceable. However, it does not limit any other legal rights or claims that a sales representative and principal might have against each other.
Whether you are an employee or an independent contractor, the business that you work for should not be able to deny you the commissions you have earned. For more information about your rights as a commissioned salesperson in either New Jersey or New York, please visit the commissions section of our website or contact our office at (973) 744-4000.