Verizon Sales Commission Lawsuit

A salesperson’s job is an extremely difficult and challenging one. Not only do they have to work hard to turn the call or visit with a prospective client to a sale, but they also have to ensure that the commission they are getting from their sale is worth all the effort. It is therefore imperative for them to read through the contract carefully before taking on a sales job. This article presents the case of Verizon Wireless as an example to understand how and why employees need to be more careful about signing contracts before joining any firm.

Verizon Wireless in California won a case against its salespeople who argued that their commissions were deducted unlawfully as they were required to repay wages. It appeared that the language used in the contract prepared by Verizon, specified that the commission of the salesperson was subject to the successful completion of the entire length of contract of the cell phone. In the event of a customer cancelling the contract within the contracted length of time, the salesperson’s commission or a portion of that commission would be deducted from their future commission. The contract in particular defined this as a “chargeback period” and stated that in the event of a cancellation, the deduction would be made from the salesperson’s next monthly payment.

A sales representative, Saul DeLeon, working in Verizon brought a wage claim against the company claiming that the company was unlawfully deducting the wages in the absence of a specific written agreement.  However, the court disagreed with the claims and wrote that the compensation plan clearly and expressly stated that these commissions were not earned by the sales representatives at the time of sale of the cell phone. These payments made to the sales representatives were clearly stated as ‘advanced’ payments. These commissions were only earned in case if the customer did not cancel the cell phone contract before the expiration of the chargeback period. The court also stated that the chargeback provision did not require the employees to pay back a portion of their wages. Since, the sales representatives were earning less than what was stated in the compensation plan.

This case of Verizon strongly suggests that sales representatives should carefully review the commission plan before signing any contract. It also brings to light that the commission plan is added on top of base wages, the plan should carefully distinguish between the hourly wages and commission.

QCommission presents the most reliable sales commission software for sales representatives. QCommission can store the sales commission plans for each individual employee. QCommission ensures that the agreement between the employees and employers are executed as agreed. The commission plan schedule in QCommission clearly includes information regarding the duration of the sales commission plan. QCommission ensures that all sales representatives can quickly review their commission results. The key advice for employers is to make sure a clear sales commission agreement that has been reviewed and signed by the employee.   It is best to declare sales commissions as advances until a qualifying event can then turn them payments. California law now requires that sales people get to review their commission plan structures. Make sure the sales people are reviewing the commission plans and there is evidence that they have reviewed it.