At-Will Employee Properly Paid Commission as Monthly Draw

December 03, 2018

Recently, an appellate court in Missouri affirmed the trial court’s determination in a bench tried case on an employee’s claim for what he described as unpaid commissions. In affirming the trial court’s Judgment, the court of appeals made clear that Missouri law allows an employer to unilaterally modify the terms of an at-will employee’s compensation. However, the facts of this case show that the employer did not fail to pay earned commissions, but rather, due to the specific compensation arrangement, employee had drawn against any commissions he had earned. SESCO has a long history of ensuring that employers are compliant with federal and state wage and hour requirements. If employers have any questions or concerns about their pay practices, we recommend they contact us to ensure compliance.

Plaintiff began working for Dennis Oil in January 2010, on a trial basis and had specific terms of compensation which involved 8% commission on profit from new sales plus a $550 per week salary. He also was to be paid 5% commission on profit from existing sales, and provided a company truck and phone. Employee did not dispute the amount or calculation of his compensation during the trial period.

Effective June 1, 2010, and after the trial had expired, the employer unilaterally changed the terms such that the employee received a guaranteed draw of $2,333.33 per month, which was to be drawn against the employee’s commissions to be earned. The employee also was to receive commissions of 5% on profits earned by employer on existing customer accounts, as well as commissions of 8% on profits earned by employer on newly-acquired customer accounts. During the bench trial, the employer’s manager explained this to be “draw against commissions”, which meant that if the employee earned commissions that exceeded the guaranteed draw amount of $2,333.33 per month, then he would be paid the excess. However, if the employee did not clear that guaranteed amount, only that amount would be paid. The employer made no attempt to recoup payments to the employee for months where his commissions fell short of the guaranteed draw amount.

It is well settled that where sales have been fully consummated, commissions are considered due and owing, even if the employee is terminated before the scheduled payout date. Earned commissions, like salary or hourly pay, are “wages” that must be paid, even if the employee is an employee-at-will. Here, however, the Southern District Court of Appeals had to enlighten employee that his simply was not a case in which his employer had failed to pay commissions he had earned.