Wisconsin Law Offers Strong Protections to Sales Representatives for Commissions Due to Them
An independent sales representative who works to secure a big contract, counting on receiving a commission, may be blindsided when the principal changes the terms of the agreement and refuses to pay. Commissioned independent sales representatives may be stuck in trying to enforce the agreement, as they are not always covered by Wisconsin’s wage payment laws.
Fortunately, Wisconsin law includes a provision specifically for the protection of independent sales representatives: Wis. Stat. 134.93. Under this statute, an independent sales representative is a person who contracts with a principal to solicit wholesale orders and is paid primarily by commission. This statute provides a legal remedy for independent sales representatives in the event of a breach of the commissions agreement – and penalties of up to 200% of the unpaid commissions for failure to comply.
Legal Penalties for Failure to Pay Commissions When Due
First, the statute states that commissions become due “as provided in the contract between the principal and the independent sales representative.” 134.93(2)(b). The statute also accounts for the common situation where no written agreement specifies when a commission comes due: then, the commission “becomes due according to the past practice.” 134.93(2)(c).
In other words, while a written agreement may be easier to enforce, the law accounts for commission agreements that don’t spell out when a commission comes due. In that situation, the past practice between the sales representative and the principal determines when the commission is due.
Next, the statute provides significant penalties for a principal who fails to pay commissions in accordance with the agreement. A principal who fails to pay commissions on time is liable for the unpaid commissions, plus damages up to 200% of the unpaid commissions. Therefore, a principal in violation of this statute for failing to pay a $1,000 commission could be found liable for the unpaid commission in addition to $2,000 of exemplary damages. Sales representatives forced to pursue their claims in court can also pursue attorneys’ fees and costs.
Principals Required to Give Notice of Changes to Commission Structure
The statute also provides protections for sales representatives against a principal suddenly changing the terms of their agreement. Unless a written contract says otherwise, sales representatives must be given 90 days’ written notice of a “termination, cancellation, nonrenewal or substantial change” in the contract between the parties. 134.93(3).
Principals who change the terms of a commissions agreement after a sales representative has already performed their work under the agreement may also run afoul of this law. If you are a sales representative who has not been paid agreed-upon commissions, Wisconsin law offers significant protections. The attorneys at Hawks Quindel can assist you with your unpaid commission claims. If you have not been paid the commissions you’ve earned, please contact the wage and hour attorneys at Hawks Quindel, S.C.