“What happens if a company doesn’t pay an individual’s bonus or commission?”
This is a question we are frequently asked. The short answer can range anywhere from “nothing” to “the company will owe triple the amount of the unpaid bonus or commission (referred to as “triple damages”), along with the legal fees and other costs.
That is a pretty wide range of possibilities! Let us help you narrow them down a bit.
The first step in deciding if “nothing” or “triple damages” happens is to determine if a bonus is actually owed. To decide if a bonus is owed, we must look to the following questions:
1) When was the bonus/commission “earned” (at the time of sale, at the time of customer
payment, on a one-time or residual basis)?
2) How was the bonus/commission calculated (gross margin, topline margin, net margin)?
3) When was the bonus/commission “due” (time of sale, at the next month’s payroll, etc.)?
4) What other things could prevent payment of the bonus/commission (i.e. clawback if customer backs out of the deal, the individual is no longer employed by the company before the commission is “earned,” whether the company has the discretion to change the bonus/commission, the individual affirmatively breached his/her agreement nullifying the bonus/commission, or the statute of limitations has run)?
If, based on the questions above, it is determined that a bonus is actually due, then we turn to state law to see if triple damages are available. Under A.R.S. § 23-355, an employee can recover triple damages if:
1) The employee can show they were owed a bonus/commission.
2) The employer cannot show that they had a good faith dispute as to the amount of wages
withheld.
Under A.R.S. § 44-1798 et seq. an independent sales representative can recover triple damages from a company when the sales representative:
1) Is contracted “with a principal to solicit orders for products or services,” and “compensated, in whole or in part, by commission.” See A.R.S. § 44-1798(3).
2) Fails to pay commissions owed in the timing set forth in to A.R.S. § 44-1798.02 subsections (A) and (B).
When deciding if attorneys’ fees are recoverable, we can look to A.R.S. § 44-1798.02(D) or A.R.S. § 12-341.01, which allow a prevailing party to recover reasonable attorneys’ fees.
As you can see, these issues are critical to explore fully with experienced legal counsel before coming to an understanding of whether a bonus/commission is actually owed and whether triple
damages are available.
Contact Counxel Legal Firm
Counxel Legal Firm has experience with both pursuing claims of unpaid bonus/commission for individuals and defending against claims of unpaid bonus/commission for companies. Our experienced legal team would be happy to help you get the best result. Please contact us at (480) 744-6621 or at request@counxel.com. Don’t forget to check out the good things that others are saying about the services they received from Timothy Coons on Google.
This article is intended for informational purposes only and does not constitute legal advice for your specific situation. Use of and access to this article does not create an attorney-client relationship between you and Counxel Legal Firm. Please contact request@counxel.com or (480) 744-6621 to request specific information for your situation.
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