Unpaid Commissions: What happens to commissions payable after termination?

Commissioned salespeople who separate from their employer often wonder whether they are entitled to be paid commissions that are payable after their separation. Generally, an employee is entitled to all commissions earned during his employment even if they are payable after his employment ends unless the commission agreement clearly and unmistakable states otherwise. See Russell v. KDA, Inc., 206 Ga. App. 397, 399 (1992).

Terminable “at-will” employees

Some employers refuse to pay commissions earned during employment but payable after termination on the grounds that the employee was “at-will.” However, Georgia courts have repeatedly held that at-will employees are entitled to recover unpaid commissions for services rendered prior to their termination regardless of their “at-will” employment status. See e.g., Argo v. G-Tec Servs., LLC, 338 Ga. App. 608, 611 (2016).

Forfeiture Provisions

Some commission agreements include a forfeiture provision that authorizes an employer to withhold payment of commissions to employees who are not employed at the time the commissions become payable. Forfeiture provisions often contain the following language or something similar:

  • Employee must be employed on the date any commission becomes payable to be eligible to receive such commission
  • No commission shall be due and payable upon termination of employee

Although forfeiture provisions are disfavored by Georgia courts, they are not unlawful and may be enforceable. For instance, in Russell, the Georgia Court of Appeals held that an employee was not entitled to commissions earned during his employment that became payable after his termination because the employee was bound by an unambiguous forfeiture provision in his employment contract. 206 Ga. App. 399.

That said, do not assume that the forfeiture provision in your commission plan or employment agreement automatically disqualifies you from recovering all commissions payable after your termination. If that provision is ambiguous, then it may not be valid.

Damages

An employee may recover unpaid commissions (plus interest), attorney’s fees, and costs. In addition, if the employee qualifies as a “sales representative” under the Georgia Wholesale Distribution Act, O.C.G.A. § 10-1-700 et seq., and his employer failed to pay all commissions owed within 30 days after his termination, then he may also recover exemplary damages in an amount up to double the amount not timely paid. See O.C.G.A. § 10-1-702.

Statute of Limitations

Generally, claims to recover wages are subject to a two-year statute of limitations. O.C.G.A. § 9-3-22. Generally, claims to recover damages for breach of an oral agreement are subject to a four-year statute of limitations. O.C.G.A. § 9-3-26. Generally, claims to recover damages for breach of a written agreement are subject to a six-year statute of limitations. O.C.G.A. § 9-3-24.

Accordingly, if you believe that you’re owed commissions, you should promptly consult with an unpaid commission attorney. Smith Law has helped numerous employees recover their unpaid commissions after termination. Most recently, SMITH LAW recovered full unpaid commissions in excess of $100,000.00 on behalf of a project manager.

Located in Dacula in Gwinnett County, SMITH LAW handles unpaid commission claims throughout the state of Georgia. Call us now at (678) 889-5191 or click the button below to find out whether our unpaid commission lawyers can help.

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