Commission Disputes

Do You Have a Dispute Involving Unpaid Commissions, Bonuses, or Deferred Income?

Commissions, bonuses, and deferred income are wages and must be paid to the employee when they normally should be paid, even if the employee is no longer on the company payroll. Employers who withhold commissions and other wages in Maryland can face damages that include attorney fees and treble damages (three times the amount owed). The District of Columbia has similar protections.

At Farber Legal in Rockville/North Bethesda, Maryland, our lawyer represent employees and employers in commission, bonus, overtime, and other wage matters throughout Maryland and the Washington, D.C., area. We offer an initial consultation at a discounted rate to discuss your case.

As an employee, you are entitled to commissions, bonuses, and deferred wages even if you are fired or voluntarily terminate. You are also entitled to payment for vested vacation time, unless your employer has a policy that specifically states it will not pay for unused vacation time upon job termination.

Maryland Wage Payment and Collection Law

The Maryland Wage Payment and Collection Law (MWPCL) provides employees with a powerful weapon to collect commissions they have earned, but that their employer refuses to pay. Under the MWPCL, when an employer wrongfully withholds wages, the employee can sue to collect these wages. If the employee is successful, a court may award the employee up to three times the amount of the wages owed. The Court may also direct the employer to reimburse the attorney's fees the employee incurred in collecting his or her wages.

In 2002, the Maryland Court of Appeals examined when an employee has earned "commissions" under the Wage Payment and Collection Law in Medex v. McCabe, 372 Md. 28, 811 A.2d 297 (2002). The case is significant because it struck down an employer's attempt to condition payment of commissions on the employee being employed on the date the commission is paid. Employers in the real estate industry often attempt to impose this condition.

Plaintiff Timothy McCabe worked as a sales representative for Medex, a medical supplies manufacturer. He earned a salary plus incentive fees. Under the terms of Medex's incentive fee plan, for Mr. McCabe to earn a commission he had to: (1) sell a certain amount of product; and (2) be employed at the time of payment. In fiscal year 2000, Mr. McCabe sold enough product to be entitled to $32,850.73 in incentive fees. Medex's fiscal year ended on January 31, 2000. McCabe resigned in early February. Payments under the plan did not occur until March 31, 2000. At that time, pointing to the condition in the plan, Medex refused to pay Mr. McCabe the fees. McCabe sued Medex to collect the fees.

The court quickly concluded that incentive fees (another name for a commission) constituted wages under the law. Next, the court held that Medex's reason for refusing to pay Mr. McCabe was invalid. Citing the section of the Maryland Wage Payment and Collection Law that requires an employer to pay all wages earned at an employee's termination, the Court stated "where an employee earns wages . . the employer must pay them, regardless of the ensuing termination of the employee." Because Mr. McCabe had done everything he needed to do to earn the fees (i.e., sell sufficient product), he was entitled to them regardless of Medex's condition that he be employed at the time of payment.

Under law in Maryland and DC, even if you are no longer working for a company, but if you did the work that led to the commission, you are still entitled to it. Many companies, particularly in the real estate industry, say that you have to be employed to receive your commission or discount how much you are paid if you leave. This is illegal under Maryland law.

If you have wage or a commission dispute, contact a lawyer at Farber Legal. We represent clients in Maryland and the Washington, D.C., area, including Rockville and North Bethesda.