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Horton Law Firm Blog Departure Policies: What Happens if You Are Fired before Your Bonus/Commissions are Paid? Part II

Departure Policies: What Happens if You Are Fired before Your Bonus/Commissions are Paid? Part II

Pay ToIf you are an employee looking to get paid a commission after you have departed your former employer, then Rice v. Multimedia doesn’t help.  However, in the 14 years since Rice, South Carolina courts have had a chance to revisit and refine an employee’s right to be paid commissions after the employee terminates employment.  In Ross v. Ligand Pharmaceuticals, Inc., 371 S.C. 464, 639 S.E.2d 460 (S.C.App. 2006), the South Carolina Court of Appeals held that an departure policy that set “target dates” for payment of commissions violated the South Carolina Wage Payment Statute.  The employee was awarded three times the amount of commissions owed ($12,000 x 3 = $36,000) plus attorney’s fees ($18,000).

So, what is difference between Rice and Ross? Consider and compare the facts:  Ross was engaged in pharmaceutical sales and unlike the process at issue in Rice, Ross had to no additional work to be performed between closing of the sale and payment of his commission.  As the Ross court noted, there was “no purpose whatsoever” to the “target dates” for payment, and therefore the target dates were arbitrary.  Recall in Rice, the employer asserted that commissions on advertising were not really earned until after the ad aired because there were some customer service functions that (theoretically) remained until airing.

The other distinguishing feature of Ross is that the “target dates” under the policy were not set and enforceable.  The employer testified that Ross would not have paid his $12,000 in commissions even if he had been employed on the next target date.  The employer further testified that it could withhold payment for a year and that employees who left in the meantime would lose their commissions.  Carrying this logic to its conclusions makes it obvious that the employee did not have an enforceable right to his commissions, which strikes at the primary purpose of the S.C. Wage Payment Statute.   The court seemed to say that the Wage Payment Statute required a “time certain” for payment.  (It is unclear if the Rice holding would survive reconsideration in light of a “time certain” requirement.)

Finally, it is worth noting that both cases are affirming lower court holdings.  So, part of the explanation for the difference in outcome may be the law’s preference to uphold the decisions of lower courts if the result is a reasonable application of law to facts.  This means that winning your case at trial is helpful to your appeal.

A microcosm of litigation: Two cases with similar dilemmas and comparable legal issues decided differently.  If you end up with a commission dispute, you will want to be able to frame your case as like Ross and different than Rice. Of course, there are other cases that help further define an employee’s rights upon departure.  Maybe we will discuss them soon.  Until then, if you have your own wage payment dispute, just make sure your lawyer knows the case law.

(It should be noted that the author of the Ross is Justice Hearn, who now sits on the South Carolina Supreme Court. Concurring was Justice Kittredge, who also now sits on the Supreme Court. Chief Justice Toal was one of the judges who decided the Rice decision.)

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