If you are a sales representative in Michigan that gets paid by commission, then Michigan law has you covered! Michigan’s Sales Representative Commission Act (SRCA) protects sales representatives’ rights to their commissions by giving them legal recourse if their employer does not pay. Sales representatives qualify for protection under the SRCA if they are employed or contracted to sell tangible goods to customers and are paid by commission off the sales. The SRCA covers: (1) when payment on an expected commission is due and (2) the compensation the sales representative is entitled to in the event of nonpayment.
Under the SRCA, payment of a commission is due based on whatever terms are laid out in the employment contract. If the contract does not specify a due date, then the history of the parties will control the due date. For example, if Bob has always paid Andy’s commissions within 7 days of the sale, then Bob will have to continue to pay Andy’s commissions within 7 days. If the parties did not specify a due date in the contract and have no prior history, then the custom of the industry will determine when payment for the commission is due. Once the due date of the commission is determined, the employer has 45 days to make payment.
If the employer does not pay within 45 days, a sales representative can file a lawsuit against the employer. This is where the SRCA really protects sales representatives. Sales representatives are entitled to the actual commission due, and they might also be entitled to additional compensation of double the commission due or $100,000—whichever is less. So, a sales representative owed a commission of $15,000 could win a judgment of $45,000!
The additional compensation becomes available if the employer “intentionally failed to pay.” According to the Court of Appeals of Michigan in Peters v. Gunnell, Inc., this language does not require the sales representative to show that the employer acted in bad faith—only that the employer acted purposefully.
The SRCA is not done yet, though! Under the SRCA, a sales representative who brings a successful claim could also be entitled to reasonable attorney’s fees!
If you are a sales representative who is expecting payment on a commission, the SRCA and the attorneys at Revision Legal have you covered. Contact us today, and we would be happy to evaluate your claim! Going to court can be a headache, but the SRCA makes it worthwhile—literally!