Fair, & Prepared
Commissioned sales representatives often have trouble collecting unpaid commissions. The Pennsylvania Commissioned Sales Representatives Law, 43 P.S. §1471, provides certain protections for sales representatives. The law applies to sales representatives who enter into an agreement with any person or entity who engages in sales as defined by the law, which applies to businesses which manufacture, import or distribute a product which is then sold to customers when the businesses employ sales representatives to solicit orders for the product and the sales representatives are paid by a commission, as either the sole or partial form of compensation.
The law requires that a commissioned sales representative who enters into an agreement for the sale of orders be provided with a contract in writing, which outlines the manner in which payment will be made, the method of payment, how payment will be computed, a time period during which the sales representative will perform services, how expenses incurred in making sales will be reimbursed, and the geographic territory or accounts assigned to the sales representative. The law also requires that the sales representative be provided with a copy of the executed contract.
When a sales representative is terminated, within 14 days following the termination, the principal must pay the sales representative all commissions due as of the time of the termination. “Termination” is defined under the law as the end of services performed by the sales representative for the principal, and includes any action that concludes the relationship of the parties. Commissions on goods delivered after the end of the agreement must be paid within 14 days of the date the commissions become due. The contract between the parties must set forth when commissions are due. If an issue arises as to the due date of the commissions or if the date on which commissions are due cannot be ascertained from the terms of the contract, the law provides that past practices between the sales representative and the principal will apply, but if there are no past practices, then the law provides that the standard is the custom and usage for the industry for which the sale representative was employed.
The Pennsylvania Commissioned Sales Representatives Law is not the sole remedy of a sales representative. The law does not provide any restrictions on rights or remedies to recover other legally awardable damages, or make other claims against the principal which may arise from an employment relationship or contract. The law cannot be waived by an agreement between the principal and the sales representative, or a contract term which provides that the contract or agreement between the principal and the sales representative is to be governed by the law of a state other than Pennsylvania.
When the principal fails to comply with the Pennsylvania Commissioned Sales Representatives Law, a sales representative may file a civil action in court for the sum total of all commissions due, plus exemplary damages, which the law defines as damages in an amount not to exceed twice the actual commissions due, plus the costs of the lawsuit, including reasonable attorneys’ fees. There is also a frivolous action provision, so that if judgment is entered for the principal and the court determines that the action was brought by the sales representative on frivolous grounds, the court can award reasonable attorneys’ fees and court costs to the principal.
If you are a commissioned sales representative who has not been paid all commissions earned, call Abramson Employment Law at 267-470-4742, or contact us online to discuss your legal options for a claim under the Pennsylvania Commissioned Sales Representatives Law.