Firms Usually Can Reshape Their Commission Policy

Q. I have been employed for eight years and my commission aside from my salary was 3% of gross income. However, due to the slowdown in business, they decided to restructure the commission. It had not changed even last year until new management came in. Do I have recourse legally since the commission structure was the same for seven years? Are they acting in bad faith?

--W.L., La Palma

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A. An employer must abide by its promises to its employees. The problem is the duration of the promises. Most employers do not commit themselves to a length of time during which any promises regarding wages or commissions will remain effective. They like to reserve the opportunity in the future, based on market conditions and other factors, to adjust compensation either up or down. Unless your employer gave you a definite promise that the commission program would last a certain amount of time, he or she probably has the right to change it.

However, any change to the commission program should not be made retroactively. Certainly any closed sales under the old plan should be paid according to that plan.

There is often a problem on sales that are “in progress.” For example, if you have completed 95% of the work for closing the sale over an extended period of time, but the customer finally signs a contract after the employer announces a new commission plan, you have been unreasonably deprived of compensation that you would otherwise have earned.

A fair employer will institute a new commission program for new sales or for a time period in the future. If the employer initially reserved the right to “officially” change the commission program at will until after a sale is confirmed, then you would have to live with that understanding.

You may want to talk candidly with new management about easing in the new program for future sales only. Weigh the advantages of arguing your rights to current management with the disadvantages of any ill will that it may cause toward you.

--Don D. Sessions, Employee rights attorney Mission Viejo

Nothing in Writing: Odd but Not Illegal

Q. My grandson has gotten involved with a business that has hired a number of young people. They are called part owners in lieu of receiving a salary. They’ve just reorganized and another company has taken over. Some have been laid off and some have been rehired. There is absolutely nothing in writing. This doesn’t sound legal to me.

--R.H., Tustin

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A. Although it’s not clear from your question what kind of business is involved, it is not necessarily illegal for a business to bring on additional owners who would work without a salary, at least during the start-up phase. The individuals must truly be owners, however, as opposed to employees. If they are actually employees (even if they have a small ownership interest in the company), they are entitled to be paid at least the minimum wage for all hours worked and perhaps premium pay for overtime. If there is nothing in writing spelling out their ownership interest, the state labor commissioner most likely would find that they are employees.

The fact that nothing is in writing is not itself illegal, however. Most employment relationships are not reduced to writing. Moreover, there is nothing illegal about one company’s taking over another company and deciding not to hire all of that company’s employees.

At any rate, your grandson might want to take advantage of this change in ownership to determine whether he wants to remain associated with this organization or would instead prefer to pursue a more remunerative arrangement.

--James J. McDonald Jr., Attorney, Fisher & Phillips Labor law instructor, UC Irvine

Written Overtime Policy Not Required

Q. My company has three shifts, the first one starting at 7 a.m. The two later shifts are required to work overtime, if necessary, while the 7 a.m. shift is only required to work until 3:55 p.m. Is this legal, proper or fair?

There is no mention of this shift distinction regarding overtime in the employee handbook. The handbook, however, states: “This booklet only highlights company policies, etc., and cannot therefore be construed as a legal document.” Is that statement accurate?

--D.K., Fullerton

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A. Although a written policy on normal work hours is recommended, it isn’t absolutely necessary. Employers have the right to assign employees to work overtime or hours other than those normally scheduled whenever necessary. Usually, this is determined by various factors such as workloads, operational efficiency and staffing needs, which often require variations in an employee’s starting and quitting times and/or total hours worked each day or week.

Depending on how clear and conspicuous the employee handbook disclaimer is, it could be interpreted by a court to be a contract of employment.

More important, however, if you are unhappy with your current shift and wish to transfer to another shift to work either more or fewer hours, discuss the issue with your direct supervisor. Determine the proper company-established procedure and pursue a change in work schedule.

--Elizabeth Winfree-Lydon, Senior staff consultant The Employers Group