Commission due dates under the MSRCA

On Behalf of | Mar 31, 2022 | Employment Law |

Commissions are the lifeblood of a sales representative. Unfortunately, they can also be a source of conflict between the sales rep and the principal. In the worst case, those conflicts can lead to litigation. Due dates are one area which can cause problems, so it’s important to understand what the law says.

The Michigan Sales Representative Commission Act (MSRCA)

Like most aspects of sales commissions, commission due dates are controlled by the MSRCA. Section 600.2961(3) determines how due dates are calculated, should there be conflict about them. In order of priority, the Act looks to any due dates specified in a sales commission contract – if the due date terms are contractually delineated, they will control.

In the absence of a contract or controlling language within it, the Act states that any past practices of the parties will control. This refers to any history of commissions paid by the principal, to the sales rep, and how due dates were previously handled. If no such history exists, the Act then turns to the industry as a whole. Is there a prevailing custom and usage within that industry, in Michigan? If so, that standard practice will largely determine the outcome of the current conflict.

Depending on the Act’s fallback provisions to determine due dates is possible, but it creates uncertainty. There is no replacement for a considerate and thorough sales contract, which reflects a meeting of the minds between the principal and the sales rep. To create such a contract, seek the assistance of a knowledgeable professional who is experienced in Michigan employment law and sales representative commissions.