It is surprising for many independent sales representatives to learn that there are specific laws in place to protect the recovery of their unpaid sales commissions from their principal. In fact, many independent sales representatives equate an unpaid sales commission to that of an unsecured debt, often simply writing off the unpaid sales commission as an uncollectable debt, not worth their time, money or other resources in trying to recover from the principal. In their view, they believe they will spend more money on an attorney trying to recover the unpaid sale commission than the amount the debt is worth in the first place. As a result, the independent sales representative will simply abandon their hard earned unpaid sales commission.
Unbeknownst to a lot of independent sales representatives, many states have laws impose significant penalties against principals who fail to pay sales commissions. In fact, some states have laws that have stronger protection to independent sales representatives’ from receiving unpaid sales commissions than are in place for employees from receiving his or her unpaid wages. In New Jersey, for example, our legislature has enacted The Independent Sales Representative Rights Act, which provides for payment of all unpaid commissions, treble damages in an amount three times of the unpaid sales commission, as well as attorney fees and costs of suit against principals who fail to timely pay their independent sales representatives their earned sales commission. This means that if you are an independent sales representative who is owed a sales commission in the amount of $2,000, you could recover up to $8,000 for the unpaid sales commission and all attorney fees and costs incurred in attempting to recover the debt. Many other states outside New Jersey have a similar law in place. The remedies provided under laws like New Jersey Sales Representative Rights Act encourage law firms like ours to take unpaid sales commission cases on a contingency basis. This means in most of our cases, our attorneys do not get paid for any of the legal work they perform unless the independent sales representative gets paid the sales commission.
It is important for all independent sales representatives to know their rights in connection with recovering unpaid sales commissions. If you are an independent sales representative, who has not been paid an earned sales commission, I strongly encourage you to reach to our firm or an attorney familiar with your particular states unpaid sales commission law, to discuss your options in recovering your hard earned sales commission.