In a recent 7th Circuit case, the court reiterated the importance of having an agreement defining the relationship of a salesperson or employee. Otherwise, the employer may be the subject of a Wage Act claim and may incur the risk of penalties and legal fees.
However, if a contract is finalized after termination, then it may still govern the employer’s obligations to pay wages or compensation. If the individual is properly qualified as a sales representative, then the payment of commissions will be governed by the contract and the Sales Representative Act for Illinois or state of operations.
Without, a proper sales representative contract there is a good chance the relationship will be construed to be one of at will employment. Unfortunately, in cases of a default at will employment relationship, employers risk wage act claims. In addition, the employer may have to make payroll contributions, unemployment compensation, and worker’s compensation obligations.
If you have any concerns or questions, about sales representatives, sales employees and the payment of commissions, then feel free to contact us.