If you are an independent sales representative who works on commission, you know the feeling of vulnerability that comes with waiting for a commission check to arrive. How many times have you heard of reps whose commissions have not been paid or have been reduced because the principal terminated the contract or changed the rules of the compensation game in mid-stream?
I come from a family of sales representatives, so this topic is important to me. The New Jersey Sales Representative Rights Act may help you, even if you think that the amount you’re owed is too small to justify hiring an attorney. Here’s why.
The Act defines a “sales representative” as “an independent sales company or other person” who is compensated at least in part by commissions. The Act requires that sales reps be paid all earned compensation, including commissions, within 30 days. If not, the representative has a claim for payment of the commission due, plus exemplary (punitive) damages of three times the amount owed, plus reasonable attorney’s fees and costs of litigation. For example, an unpaid $5,000 commission could yield a recovery of (a) the $5,000, plus (b) exemplary damages of $15,000, for a total of $20,000. That’s a lot of legal clout if you know how to use it.
The details matter with this law, and there are exceptions (real estate agents and securities brokers are not covered), so talk to a knowledgeable lawyer. You may not have to take getting stiffed on a commission lying down.