Refusal to Pay Sales Commission to Former Employee Upheld

Published Date: 
April 1, 2008

Neal v. Eastern Controls, Inc., Docket No. A-4304-06T1 (App. Div. 2008) — The Appellate Division affirmed a lower court decision which held the employer properly refused to pay sales commissions to a former employee where the customer paid for the product only after the employee had left the company.  Because the employer's policy expressly stated that employees would not be paid commissions on sales where the employer received payment after the employee terminated, and the employee continued to work for the company even after he was aware of the policy, the Appellate Division held that the employee could not recover the commissions under the Wage Payment Law or a theory of quantum meruit.

The case is interesting because it appears to contradict — without ever mentioning — a published Law Division decision holding that an employer could not withhold commissions in such circumstances, and that any policy or agreement that purportedly allowed the employer to refuse to pay commissions to an employee simply because his employment terminated would be void as a forfeiture in violation of public policy.  See, Mulford v. Computer Leasing, Inc., 334 N.J. Super. 385 (Law Div. 1999).

Note: This article was published in the April 1, 2008 issue of the New Jersey eAuthority.