Michigan Sales Representative Commission Act

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 also provides that a sales representative who brings a successful claim could be entitled to reasonable attorney’s fees!

Who Qualifies as a “Sales Representative” Under the SRCA?

The SRCA applies to individuals who are employed or retained to solicit orders for the sale of tangible goods and who are paid by commission — either in whole or in part. The statute covers both employees and independent contractors, which is an important distinction: many Michigan businesses attempt to classify their salespeople as independent contractors to avoid the obligations of employment law, but the SRCA applies regardless of how the relationship is characterized.

The statute covers sales of tangible goods — physical products — not services. Sales representatives in service industries may have recourse under contract law and other statutes, but the specific treble-damages protection of the SRCA is limited to tangible goods. Revision Legal advises sales representatives in both categories on the best legal avenue for recovering unpaid commissions.

What Constitutes an “Intentional Failure to Pay”?

The doubling damages provision of the SRCA turns on whether the employer’s failure to pay was “intentional.” As the Michigan Court of Appeals held in Peters v. Gunnell, Inc., intentionality does not require proof of bad faith or malicious motive — it requires only that the employer purposefully chose not to pay. An employer who disputes whether a commission was earned may have a legitimate defense. But an employer who simply delays or refuses payment after the commission obligation has been established — without a good-faith legal basis for the dispute — is likely to be found to have intentionally failed to pay, triggering the enhanced damages provision.

Protecting Yourself Before a Dispute Arises

The most effective time to protect your commission rights is before a dispute arises. Sales representatives should insist on written commission agreements that clearly define: the commission calculation method and rate; the triggering event for commission (order placement, delivery, payment receipt, or other milestone); the due date for commission payment; the treatment of commissions on deals that close after the representative’s departure; and the process for disputing commission calculations. Ambiguities in commission agreements are frequently the source of disputes, and they tend to be resolved against the party who had the power to draft the agreement clearly — usually the employer.

Post-Termination Commissions: A Common Battleground

One of the most common and contentious commission disputes involves deals that are in the pipeline when a sales representative’s employment ends. Some employers attempt to deny commissions on deals that closed after termination, even where the representative’s efforts were the primary driver of the sale. Under the SRCA, commissions that were earned before termination — under the terms of the agreement — must be paid within 45 days of the due date, regardless of whether employment has ended. Revision Legal advises both sales representatives and employers on their respective rights and obligations regarding post-termination commissions.

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 at 855-473-8474 or through our online contact form and we would be happy to evaluate your claim.

Practical Guidance for Sales Representatives

Beyond the legal framework of the SRCA, sales representatives can take practical steps to protect their commission rights. First, always have a written commission agreement that clearly defines the commission calculation, the triggering event, and the payment timeline. Oral commission agreements are enforceable but much harder to prove in court. Second, document your sales activity — keep records of leads generated, proposals submitted, negotiations conducted, and orders secured. This documentation is essential if you need to prove that a commission was earned. Third, track commission payments and compare them against your records. Discrepancies are much easier to resolve early than after months or years have passed.

For employers, the SRCA creates an incentive to pay commissions promptly and to resolve disputes in good faith. The treble damages provision means that the cost of losing an SRCA claim can be three times the original commission obligation, plus attorney’s fees. Building a culture of commission payment accuracy and timeliness is not just good business practice — it is essential risk management. Revision Legal advises employers on commission agreement drafting, compensation plan design, and SRCA compliance to minimize the risk of disputes.

If you are a sales representative who is expecting payment on a commission, contact Revision Legal at 855-473-8474 or through our online contact form. We would be happy to evaluate your claim.

Why Work with Revision Legal?

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Our attorneys have handled cases at every level of the federal court system, including the United States Court of Appeals for the Federal Circuit, the Sixth Circuit, the Ninth Circuit, and before the Trademark Trial and Appeal Board. We manage trademark portfolios for hundreds of clients, ranging from individual entrepreneurs registering their first mark to publicly traded companies maintaining global trademark portfolios across dozens of countries.

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Whatever your intellectual property or internet law need — whether you are protecting a new brand, enforcing your rights against an infringer, defending against a legal demand, or navigating a complex licensing transaction — Revision Legal has the expertise to help. Contact us today at 855-473-8474 or through our online contact form to discuss your matter.