The purpose of this FAQ is to provide guidance on common questions our firm receives concerning: (i) a worker’s entitlement to commissions and bonuses; and (ii) what remedies and damages exist in the event a lawsuit is filed over unpaid commissions or bonuses. This article only provides guidance under Florida law. Nothing in the article is intended to provide legal advice. All disputes over commissions and bonuses are fact specific and require an independent analysis.
Cantrell Zwetsch is a litigation boutique that specializes in employment law, including disputes over unpaid commissions and bonuses. We are regularly asked to represent those with claims for substantial unpaid compensation, such as top sales producers, executives and other highly compensation individuals. If you have any specific questions concerning unpaid compensation, contact the attorneys at Cantrell Zwetsch.
1. Am I entitled to unpaid commissions or bonuses in Florida?
In Florida, contract law protects an individual’s right to unpaid commissions and bonuses. Disputes commonly arise in several contexts for commissions and bonuses. Specifically, commission disputes often arise concerning: (i) payment of commission tails post-termination; (ii) recategorizing new accounts as house accounts; and (iii) reducing or changing the commission percentage after sales were made. As to bonus disputes, they often arise concerning entitlement to bonuses post-termination, as well as withholding of bonuses under any “for cause” provision of an employment agreement.
The most common dispute concerns payment of commissions and bonuses post-termination. Under Florida law, commissions must be paid even after an employee’s or contractor’s work relationship ends with a company – unless a mutual understanding to contrary exists. This is common in industries where a sales producer obtains customers that pay for services or products on a monthly basis (e.g., insurance policies). There are several ways a company may ensure a mutual understanding is established that commission are not due post-termination. Common examples include:
- A signed employment agreement that contains clear language indicating no commissions are due post-termination.
- An acknowledged employee handbook or set of policies that includes a similar provision that no commissions are due post-termination. (Even here, however, an individual may still be entitled to post-termination commissions if the handbook or policy was not acknowledged by the individual.)
- The individual is clearly responsible for not only making the sale, but also for providing the services associated with the sale (i.e., a service contract).
- There is a recognized custom in the business that the right to commissions terminates with employment.
Again, however, where a contract is silent as to post-termination rights to commissions, the commissions generally are deemed earned when the sale is made even though the goods or services may be furnished after the termination. Similarly, whether a bonus is due post-termination also depends on the understandings of the parties. Absent a written document providing otherwise, an earned bonus is due even if the pay date for such bonus would be post-termination.
As reflected above, whether an individual has a contractual right to commissions or bonuses is not always black and white and may require a careful analysis of all agreements, policies, practices, and other facts that may be evidenced in a case.
2. Does a promise to pay commissions or bonuses have to be in writing or is an oral agreement enough?
Entitlement to commissions or bonuses may be based on an alleged oral contract. A written agreement is not required.
It is obviously prudent, however, for companies and workers to put their agreement into writing. A formal written agreement is not required. An email to the employee or contractor recapping the oral agreement may be enough. Reducing to writing the amount and terms for payment of commissions or bonuses prevents conflicting memories of such amount or terms.
3. What damages am I entitled to in Florida for unpaid commissions or bonuses?
The amount of damages you may recover for unpaid commissions or bonuses depends on the type of claim:
- Unpaid Wages under Florida Statute § 488: the full value of unpaid commissions or bonuses, pre-judgment interest, attorney’s and costs. In some circumstances, liquidated damages (i.e., double damages) may be available.
- Breach of Contract: the full value of unpaid commissions or bonuses, pre-judgment interest, and cost. Attorney’s fees are generally not available for breach of contract claims, unless the contract itself allows for the recovery of attorney’s fees.
- Unjust Enrichment: the full value of unpaid commissions or bonuses, pre-judgment interest and costs. Attorney’s fees are generally not available for unjust enrichment claims.
4. Can I recover punitive damages for unpaid commissions or bonuses in Florida?
Generally, no. In Florida, punitive damages are not available for claims of unpaid wages under Florida Statute § 488, breach of contract, or unjust enrichment. Those are the most common claims asserted for unpaid commissions or bonuses.
In rare situations, however, a company may intentionally misrepresent the amount of commissions or bonuses it will pay an employee. Under such circumstances, a claim for fraud can be asserted, which can allow a party to recover punitive damages.
5. Can I recover attorneys’ fees if I win a lawsuit over unpaid commissions or bonuses in Florida?
Both unpaid commissions and bonuses are considered “unpaid wages” for purposes of Florida Statute § 448. That is important because that statute allows for the recovery of attorney’s fees if a party prevails in a civil action for unpaid wages. In some situations, liquidated damages (i.e., double the amount of wages due) may be recoverable under Florida Statute § 448.
Florida law allows for the recovery of attorney fees to incentivize attorneys to file and litigate unpaid wage lawsuits even if the amount of unpaid wages is relatively small. See Hingson v. MMI of Florida, Inc., 8 So.3d 398 (Fla. 2nd DCA 2009). That incentive, in turn, motivates companies to ensure they properly calculate and timely pay wages, including commissions and bonuses.
6. What is the statute of limitations in Florida for claims over unpaid commissions or bonuses?
When is it too late to file a lawsuit under Florida law for unpaid commissions or bonuses? As set forth in Florida Statute § 95.11, the answer depends on the type of claim asserted:
- A claim for breach of contract has a four (4) years statute of limitation.
- A claim for unpaid wages under Florida Statute § 448 has a two (2) years statute of limitation.
Filing a lawsuit within the two-year statute of limitations is important to ensure that attorney fees are recoverable under Florida Statute § 448.
As a practical matter, a lawsuit should be filed as soon as possible after learning of unpaid commissions or bonuses. More delay generally results in memories fading and documents being deleted – both of which are not helpful when building evidence to win a case. Additionally, if the lawsuit seeks to recover unpaid commission tails, then each month of delay in filing the lawsuit may be an additional month of commissions that cannot be recovered.
7. What are the pre-suit requirements in Florida for filing a lawsuit over unpaid commissions or bonuses?
There are no pre-suit filing requirements in Florida for unpaid commissions or bonuses.
At Cantrell Zwetsch, we have spent years creating an effective and efficient process for obtaining full value of claims for unpaid commissions and bonuses. As a best practice, a pre-suit demand letter is generally sent. If that letter does not resolve the claim, a lawsuit is quickly filed. We limit the number of unpaid wage claims we take on at any given time. That allows us to allocate the resources necessary to properly litigate each claim and, if needed, go to trial.
The Cantrell Zwetsch Approach to Unpaid Commissions or Bonuses
We are unique in that we don’t take a case with the idea of settling for pennies on the dollar. To the contrary: we often go to trial, or come close to trial, because we are determined to recover full value for a client’s claim. For that reason, we must purposefully limit the number of clients we represent in lawsuits at any time – that is the only way we can give each client’s case the time and resources they need to obtain the best possible result. We also focus on our core competencies, which include unpaid wage claims involving commissions or bonuses
At Cantrell Zwetsch, our attorneys hail from top law schools and have graduated near the top of their classes. Each of our attorneys are committed to working tirelessly on behalf of our clients, striving for an effective and efficient outcome. We are glad to share references. If you are considering an unpaid wage attorney in Florida, consider Cantrell Zwetsch.
We handle unpaid wage disputes throughout Florida and Georgia. You can contact the firm at 813-867-0115 or at firstname.lastname@example.org.