Kentucky Court of Appeals Enforces Agreement Allowing Employer To Recoup Commissions
In an opinion released September 14, 2007, the Kentucky Court of Appeals enforced a written agreement allowing an employer to recoup commissions paid to its employees in circumstances where the customer failed to maintain an "acceptable payment history" for 12 months.
Under the employer's written "Compensation Plan and Policy" (signed by its commissioned employees), the employer paid half of a commission at the time the initial sale was recorded in the employer's computer records, and paid the second half after billing the customer.
The Compensation Plan and Policy provided that if a customer failed to retain the service and maintain an "acceptable payment history" for 12 months, the commissions could be recovered in the form of credits against future commissions. The Court considered recoupment of commissions as part of the "agreed upon" wage under Kentucky's wage and hour statute. To read the opinion, click here:
http://opinions.kycourts.net/coa/2006-ca-000402.pdf
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Attorney Spotlight
Deborah S. Adams is a member of Frost Brown Todd LLC and practices in the labor and employment law practice group. She represents management in the areas of employment discrimination and wrongful discharge.