If a business in Michigan fired or forced a sales representative to resign, there may be unpaid commissions that the sales rep earned before termination. There are often questions about what a company still owes a sales employee and whether or not the employee is still entitled to their commissions. The answer will not be the same in every case, but there are guidelines and laws that can help employees understand if their previous employer owes them unpaid commissions.
Here are the key points to know about how commissions and terminations work in Michigan.
Payment of wages and commission at termination
According to the Michigan Department of Labor and Economic Opportunity, employers must pay departing employees all their earned wages on the regularly scheduled payday during the period the employer enacts the termination. Commissions are technically wages, but because employers often calculate and schedule them differently than regular wages, the rules differ. The first thing a sales representative should know is the terms of their employment contract. The contract is the most important factor in figuring out what and when employers must pay unpaid commissions.Michigan state statutes outline that employers must pay commissions within 45 days of termination and that they must pay any commissions that came due after termination within 45 days of the date they came due.
Consequences for unpaid commissions
If an employer or contractor does not pay the commissions they owe terminated employees, they can be liable for damages caused by the unpaid wages. If they withheld the commission intentionally, the employer must pay two times the commissions that were due or $100,000.00, whichever is lower.