Magazine article Management Review

Protecting Salespeople's Rights

Magazine article Management Review

Protecting Salespeople's Rights

Article excerpt


When successful salespeople start earning more than some CEOs, it is not uncommon for their territory to be cut without warning, their accounts to be taken away, or their commission rate to be changed, according to Steven Mitchell Sack, a New York City-based labor lawyer and coauthor of The Salesperson's Legal Guide (Prentice-Hall, Inc., 1981).

There was a movement in Congress in the early 1980s to pass laws protecting sales representatives, but manufacturers lobbied against such bills as the Sales Representatives' Contractual Relations Act, which was defeated. But recently salespeople have lobbied successfully in many states to receive prompt payment of commissions, written contracts, and awards of attorneys' fees and court costs.

New York state recently passed one such law protecting salespeople. "This law requires the prompt payment of a rep's commission within five days of termination or the earning of a commission. If the manufacturer does not pay the commission within this timeframe, the salesperson can collect damages of two times the commission amount plus attorneys' fees," explains Sack. "Also, awarding legal fees is a new concept--fees were never before paid by the losing party in such litigation." Currently 21 states recognize sales reps' rights, according to Sack, among them Florida, Georgia, New York, Maryland, and Texas.

Despite such new laws, salespeople still must follow preventive steps to protect their earnings, according to Sack. He offers the following tips:

] Always investigate the company before accepting a job there.

] Avoid oral promises.

] Don't accept a job offer over the phone.

] Make sure the person offering the job has the authority to do so.

] Negotiate all aspects of the deal before beginning work. For example, define territory and how commissions are earned, and do not accept unfair deductions from commissions for off-price goods, advertising allowances, and so on. …

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