Is it legal to withold goals and comp plan for commissioned sales folks?

[Rick Lee]

I have a weird situation. I get a base salary plus commission. My offer letter states the commission is $XX at 100% of target, paid quarterly. I got this offer in Sept. 2013. Here were are at the end of Q2 2014 and we still have not received goals or a comp plan for 2014. My whole team got the max commission for Q4 2013 and it wasn't paid until Feb. 15, 2014. Now they say quarterly commissions will be paid 60 days after the end of the quarter. That doesn't sound like quarterly to me.

We were all sure we'd have goals and a comp plan by end of May, since the payout date for Q1 was end of May. On May 28th they brought us into a room, one at a time, and gave us a seemingly arbitrary commission statement. All of us got far less than we did for Q4 and far less than the 100% of target number on the offer letter. They had a super convoluted formula and said some folks got curved up so they'd at least get something, but that they could owe it back if they don't make it up in future quarters. WTF? To date no goal, KPI, metric or target has been communicated on paper or email, just gossiped about on the sales floor.

Anyway, is it legal to get out of paying people their 100% of target by simply withholding said target? Absent goals and a comp plan for 2014, does the 2013 plan remain in effect? Can they really pay us two mos. after the end of a quarter when the letter says commissions are to be paid quarterly?

All of us are looking for new jobs now and don't want to rock the boat until we're out, but we want to consult with a lawyer or the state employment commission. What do you guys think?

[cantdrv55]

I had a similar experience with my current employer a few years ago. We did not get our IC plan until July! We were given advances until then. Someone took the company to court. I am not sure if that rep is still with us. I know that the VP of Sales isn't.

[Baz]

Originally Posted by Rick Lee

---snip---

All of us are looking for new jobs now and don't want to rock the boat until we're out, but we want to consult with a lawyer or the state employment commission. What do you guys think?

This last part of your post is what i would do.

I worked in corporate sales at one point in my life and we were paid a decent base salary plus bonus if we met our target. Our targets were always given to us at the beginning of the year. But our bonuses were not paid quarterly - but in a lump sum at the end of the year if we met our target. But they were there right after the year ended.

You are getting jerked around it sounds like to me.

[porsche4life]

Something's up. Some restructuring is going on above you guys. They are about to change the pay plan or something. Id cut back on spending and make sure I had a little extra $$ sacked away just in case they RIF you guys. Something just doesn't feel right.

[red-beard]

If they are jerking you around, something is seriously wrong with the company. Get going NOW.

[RANDY P]

Sounds like cashflow problems.

What's the rumor?

rjp

[tedg04]

Originally Posted by RANDY P

Sounds like cashflow problems.

What's the rumor?

rjp

+1

Can't get blood from a turnip. I don't know what kind of dollar values you're talking about, but I think most small claims courts cap it at $10k. Based upon what you've given for info, I would be very surprised to not see a small claims court find in your favor (only the preponderance of evidence is required). However, that will just give them a judgement to pay. If they don't have the money, don't expect to get it.

Sounds like a rinky-dink company. Nothing wrong with working for a small company. Lots of things wrong with working for a poorly run company.

[Rick Lee]

We're actually contractors working for a Fortune 50 company you've all heard of. I'll call them the Mother Ship and our employer Dingy. Mother Ship has no money problems at all and Dingy's contract with them has grown exponentially in the last few mos. I think Mother Ship twisted Dingy's arm to bill us out for less in 2014 in exchange for hiring 4x as many more people. But how could it have taken until end of May to figure out how to screws us out of commissions? Actually, they still have no comp plan and are working on it. We were erroneously copied on an email to the Mother Ship employees who do the same thing we do, telling them they will be paid at 100% of goal due to the late comp plan roll out and trued up if they exceeded those goals. That was in early April and they're all taken care of now.

Anyway, obviously, we're all planning on living on base salaries only from now on and anything else we get will be considered manna from heaven. But do we have a legal case if 10 or more of us all have a letter stating we'll make $XX at plan and then they give us no plan and just make up a random number far smaller than $XX when commission pay day comes?

[stomachmonkey]

Originally Posted by RANDY P

Sounds like cashflow problems.


rjp

Oh yeah.

Run Forrest, run.

[LWJ]

I had a situation like that about 12 years ago. Corporate officers took a company down the toilet in an amazingly short time. Luckily, they let me go before I suffered too long!

It is a warning sign. Polish the resume. Just saying.

Good luck!

Larry

[Rick Lee]

I'm pretty sure lack of funds isn't the issue here, which makes it even more sinister. Mother Ship throws billions around like our gov't. does, except they actually operate in the black. Mother Ship is very happy with Dingy's performance. In fact, Mother Ship laid off a whole dept. that did what we do when it became clear we were outperforming them after just two mos. on the floor.

[RANDY P]

Could be a deal pending for sale as well....

Stack up cash, sell this end of business.

[Rick Lee]

Ok, any chance of legal recourse once we all land elsewhere or sooner?

BTW, I heard a rumor today that the director back east has asked our director for a daily email describing our team's mood.

[boba]

If mother ship did not have goals set for their staff it could follow that dingy could not set goals until mother ship passed them down. Dingy could be getting squeezed and we all know how that flows. Time to be alert for signs and ready to move. As they say it could all work out, or not.

[Rick Lee]

Oh, it's not gonna work out. They're not gonna suddenly reverse course and hand us all big true-up checks. Zero chance of that happening. And because of how the billing works, Q2 pretty much ended last week. Today we got a calendar invite for a meeting to roll out the 2014 comp plan next Tues. We all giggled as soon as it showed up. Less than 10 min. later it was canceled.

[stomachmonkey]

Either someone at Dingy screwed up or Mother Ship torched internal group and is looking to acquire Dingy to replace it. They'll wait and see who comes along. Those of you they want to retain they will toss a big cash offer at paid in part by those who bail and therefore forfeit their comp.

[VincentVega]

Hang in there.

I went through the same thing for years. Late comp plan, no comp plan, get a plan then they change it.... par for the course unfortunately.

[LWJ]

This sort of new normal makes it difficult for those of us that operate with ethics. I feel for you Rick.

Larry

[mikester]

Seems lame. I've had late comp plans but always with contingencies in place to make up for it.

[wildthing]

If goals and quotas have not been set we usually pay a draw that can be applied to back-calculated commissions or taken back if you underperform. Some generous companies give the draw outright and just calculate commissions starting the day you get your quotas. But that is more rare these days.

I am in sales operations and have dealt with tech sales comp. Not sure if it applies to other industries.