STATE: MICHIGAN
This will be long because I, hopefully, want to present a clear picture of my issue and questions.
When he was hired by his current employer, he was actually recruited away from the job he had at the time, and promised all sorts of things, of course. A month after he started, the guy who hired him left after 19 years with the company and he has played havoc in getting things that were promised to him by the former employee who hired him. To date, all items have been resolved satisfactorially on both sides.
However, a new issue has come up. When he was hired, it was stated IN WRITING what the commission program was. He was to get a salary plus commission based on certain criteria. That criteria was this, and I hope I can explain it so it makes sense:
Commissions are to be paid on gross profit margins on a quarterly basis. The more profit you can make for the company, the more commission you will receive.
Commissions are also based on looking back at the same quarter for the PREVIOUS year. i.e. if a salesperson sold $10,000 worth of product during the 1st quarter of 2005 with attendant gross profit and then sold $20,000 with attendant gross profit for the 1st quarter of 2006, he would get a commission. He would also get a commission if he maintained the same level of sales and gross profit. If it was less, no commission.
Obviously, the key and incentive is to sell more and more and more in order to meet commission criteria. Pretty simple. The more you sell, the more you make. If he sold less in the 1st quarter of 2006 than in the 1st quarter of 2005, he would not meet the criteria for being paid commission and would receive no commission plus his base salary would be lowered.
Makes sense to this point, I believe, no arguments with it.
Now, what has happened is that a long time employee has left the company after 18 years. My husband has been put in charge of all of this former employee's account and is to service and sell to them. Sounds good, doesn't it? All those accounts just dropped in his lap.
Well, now we find that this ex-employee carried a lot of dead accounts, accounts defaulting on payments and accounts that no longer buy product and haven't for some time or are not buying as much as they used to.
So, when it comes time for commission payment, these ex-employee's accounts are now listed as my husband's and are counted in when the employer calculates gross profit and commission. No matter that 99% of them are useless accounts and not generating sales or profit and haven't for some time.
When his last commission period came around, the company compared the 1st quarter of 2006 with the 1st quarter of 2005. In the 1st quarter of 2005, this ex-employee actually LOST the company money while in the 1st quarter of 2006 my husband actually increased his own accounts in terms of product sales and gross profit margin (excluding the ex-employee's accounts that were passed on to my husband).
Because the ex-employee had such poor performance in the 1st quarter of 2005 (and, in fact, up until he quit), my husband actually lost money for the 1st quarter of 2006. Because the prior period it was compared to was so bad, they are now docking my husband's pay because of this prior poor performance of an ex-employee.
His salary has been reduced and he received no commission because they compared it to a time period when my husband wasn't even employed by the company and based their calculations on a prior employee's performance.
They have also told him that if the ex-employee had had great accounts with good profit margins, my husband would see no benefit from that because they weren't his accounts last year but have no problem docking his pay because of poor performing accounts that occured prior to his employment.
In other words, they are penalizing him for the ex-employee's poor performance and would not "reward" him if the ex-employee's accounts were the result of good performance.
Long explanation to ask a simple question. How can the employer calculate my husband's salary and commission accurately when they are based on the poor performance of a prior employee, during a time when my husband wasn't even employed by the company? If these accounts had not been dropped on him, he would have had a great first quarter of 2006, received a good commission and his salary would not have been lowered. Instead, he is basically being penalized because someone else did not do the job while my husband did.
Just trying to figure out if this is really legal?
This will be long because I, hopefully, want to present a clear picture of my issue and questions.
When he was hired by his current employer, he was actually recruited away from the job he had at the time, and promised all sorts of things, of course. A month after he started, the guy who hired him left after 19 years with the company and he has played havoc in getting things that were promised to him by the former employee who hired him. To date, all items have been resolved satisfactorially on both sides.
However, a new issue has come up. When he was hired, it was stated IN WRITING what the commission program was. He was to get a salary plus commission based on certain criteria. That criteria was this, and I hope I can explain it so it makes sense:
Commissions are to be paid on gross profit margins on a quarterly basis. The more profit you can make for the company, the more commission you will receive.
Commissions are also based on looking back at the same quarter for the PREVIOUS year. i.e. if a salesperson sold $10,000 worth of product during the 1st quarter of 2005 with attendant gross profit and then sold $20,000 with attendant gross profit for the 1st quarter of 2006, he would get a commission. He would also get a commission if he maintained the same level of sales and gross profit. If it was less, no commission.
Obviously, the key and incentive is to sell more and more and more in order to meet commission criteria. Pretty simple. The more you sell, the more you make. If he sold less in the 1st quarter of 2006 than in the 1st quarter of 2005, he would not meet the criteria for being paid commission and would receive no commission plus his base salary would be lowered.
Makes sense to this point, I believe, no arguments with it.
Now, what has happened is that a long time employee has left the company after 18 years. My husband has been put in charge of all of this former employee's account and is to service and sell to them. Sounds good, doesn't it? All those accounts just dropped in his lap.
Well, now we find that this ex-employee carried a lot of dead accounts, accounts defaulting on payments and accounts that no longer buy product and haven't for some time or are not buying as much as they used to.
So, when it comes time for commission payment, these ex-employee's accounts are now listed as my husband's and are counted in when the employer calculates gross profit and commission. No matter that 99% of them are useless accounts and not generating sales or profit and haven't for some time.
When his last commission period came around, the company compared the 1st quarter of 2006 with the 1st quarter of 2005. In the 1st quarter of 2005, this ex-employee actually LOST the company money while in the 1st quarter of 2006 my husband actually increased his own accounts in terms of product sales and gross profit margin (excluding the ex-employee's accounts that were passed on to my husband).
Because the ex-employee had such poor performance in the 1st quarter of 2005 (and, in fact, up until he quit), my husband actually lost money for the 1st quarter of 2006. Because the prior period it was compared to was so bad, they are now docking my husband's pay because of this prior poor performance of an ex-employee.
His salary has been reduced and he received no commission because they compared it to a time period when my husband wasn't even employed by the company and based their calculations on a prior employee's performance.
They have also told him that if the ex-employee had had great accounts with good profit margins, my husband would see no benefit from that because they weren't his accounts last year but have no problem docking his pay because of poor performing accounts that occured prior to his employment.
In other words, they are penalizing him for the ex-employee's poor performance and would not "reward" him if the ex-employee's accounts were the result of good performance.
Long explanation to ask a simple question. How can the employer calculate my husband's salary and commission accurately when they are based on the poor performance of a prior employee, during a time when my husband wasn't even employed by the company? If these accounts had not been dropped on him, he would have had a great first quarter of 2006, received a good commission and his salary would not have been lowered. Instead, he is basically being penalized because someone else did not do the job while my husband did.
Just trying to figure out if this is really legal?