My Colorado company is changing the commission structure, is this legal?

My Colorado company is changing the commission structure a week before the quarter ends. The company claims that the commission plan is the same, but through the quarter the sales managers and director misunderstood the plan, and therefore didn't explain it properly to us when signing the agreement, or the multiple times we asked for clarity throughout the quarter. They are now saying the commission is not payable for 6 months, and therefore subject to a new (lower) commission plan they are rolling out for H2.

1 answer  |  asked Jun 27, 2019 09:25 AM [EST]  |  applies to Colorado

Answers (1)

Neil Klingshirn
The answer depends on Colorado contract law on employee commissions. I do not know and have not researched Colorado law on that topic.

Ohio has a specific law protecting manufacturers' reps paid on a commissioned basis. You could check to see if Colorado has a law like that protecting employees paid on a commission basis.

In addition, general Ohio employment law, rooted in at-will employment, says that an employer must pay an agreed upon wage for the hours its employee worked and cannot pay less than that amount without notice to the employee and consent to take the lower amount. The consent could be continuing to work (not quitting) but the employee has to know he or she has a choice.

Legally speaking, notice and consent is an offer and an acceptance to amend the original employment agreement, where Pay = X hours x Y wage. The amendment is to reduce Y, the wage.

An amendment to an agreement requires an offer, acceptance and consideration, just like the original employment agreement and any other contract. An offer must be understandable, both by you so you know what you agreed to, and by the Court, which has to calculate a remedy based on the contract terms. If ambiguous or incomprehensible, it is not an offer. No contract (or amendment) can come of it, under Ohio law.

So, if this was in Ohio, you could argue that the employer failed to offer a reduced commission schedule in sufficiently clear terms to permit employees to accept it, that no one accepted it until it was sufficiently clear, and that the employer owes at the old commission rate until that offer and acceptance occurred. Check with a Colorado employment lawyer to see if that is the law there. If multiple employees were similarly affected by the change in pay, one lawyer might be able to help them all.

posted by Neil Klingshirn  |  Jun 27, 2019 10:07 AM [EST]

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