Salespeople are a unique part of the working world. They are typically outgoing, persistent people, who regularly face rejection but soldier on. Sales reps are often compensated differently than other workers. Employers commonly pay their salespeople a commission.
A commission is money paid upon completion of a task, usually the task of selling a certain amount of goods or services. The commission can be a percentage of the sales or a flat dollar amount based on sales volume.
A commission-based pay system motivates salespeople to sell more. More sales equals more money in their pockets. And for salespeople in Illinois, a special employment law is in place to protect them and their rightfully earned commissions.
The Illinois Sales Representative Act (ISRA) regulates how employers must pay commissions. The ISRA has three main points: 1) when commissions come due to the employee; 2) how employers should handle commissions that are owed to an employee who has been terminated; and 3) penalties to employers if they do not comply with the Act.
There are a few scenarios in the ISRA regarding when the employer must pay the commissions. If the employee’s contract lays out a due date for the commission, then that is the due date. But if the employee works without a contract, or the contract doesn’t include a due date, then the employer’s past practice of when they paid the employee commissions holds. Lastly, if the employer just recently hired the salesperson, and therefore there is no past practice, then the Act uses the standard industry practice to determine when the employer owes commissions.
The second main point of the Act details requirements for paying commissions to terminated employees. If the employer owes any commissions to the employee at the time he/she is terminated, then the employer must pay those commissions within 13 days of the termination. In addition, if more commissions come due after the employee is let go, then the employer must pay those no later than 13 days after they come due.
Even if an employee waived their right to collect commissions after they are terminated, the ISRA says that waiver will not be enforced. In layman’s terms, a sales rep can’t be stiffed, even after they have been fired. You did the work and closed the sale. You will get the commission you earned.
The Act also details severe penalties for employers who fail to comply with the guidelines for when to pay commissions. A salesperson can sue them for failure to pay, and receive up to three times the value of the commissions. The employer may also be ordered to cover the employee’s court costs and attorney’s fees. So in plain English that means it costs nothing typically to hire an attorney to help you go after commission that you are owed. Beyond that, because they have to pay your lawyer fees and potentially triple the amount owed, a lawsuit can bring real leverage to getting you the result you are entitled to.