Base salary is being replaced with 100% commission due to bad economy

I wanted to inquire if I am going to be eligible for unemployment if my employer just notified me by email that they are moving me to 100 commission on Fri with out warning. The reason for this listed in the email is I moved to a new area, they agreed to keep me on and develop a new area but it has not worked due to slow industry, slow company, bad economy and low sales. In the email they said that they want to know what I want to do, stay with them and receive only commission and my income atke a huge hit (50%) or move on. What are my choices? I want to make sure I do the right thing in hopes that I can be eligable for unemployment and still partially provide for my family.

Thanks for your help.

Jason F




Jason,

What state are you located in?

Comments for Base salary is being replaced with 100% commission due to bad economy

Average Rating starstarstarstarstar

Click here to add your own comments

Oct 20, 2013
Can I get benefits for being fired because not meeting quota
by: Anonymous

I have been workin for the same employer for past three years . last week I was terminated because the company rule is that you may be fired if you do not make quota three consecutive months. I work in the furniture industry and when a customer complains about delays or damaged furniture, the rep takes a hit which then lowers the monthly quota. I have had a lot of these situations over the past three months. In addition The company filed chapter 11 in Sept. customers are aware and traffic and sales are off. I filed for yo but not sure if I will receive benefits. Is this considered poor performance if company has mfgr problems? what do you think my chances are? I received salary & commission.



Hi Anonymous,

As explained, I am not accepting new unemployment questions ..

Although I realize why the comment function is used to ask new questions about a general reason for termination, it is something I can't get rid of and was intended for commenting that may, or may not of occurred between myself and the person who asked the original question.

Because details matter .. especially in cases of a DCJP (discharge for job performance). I need to be able to ask questions to determine if there's a chance a person can argue effectively, at an unemployment appeal hearing there was no intentional willfulness to harm the employer's interest, or intentional neglect of duties .. which is what the employer's burden must prove.

Your chances? Since I don't know which state you're asking about .. Let's just use last year's national unemployment recipiency statistic .. 26 percent chance you'll get benefits.


Mar 18, 2013
NC rights
by: Anonymous

In NC. Brought on 9 weeks ago with salary and commission. Was told I would receive raise in 90 days as well. 8 weeks in was told a quota needed to be made ( that is unreachable) in order to keep salary otherwise going commission only.

Have a contract in writing stating salary and commission.

Can I collect unemployment when I quit April 1st ( the day the new structure begins)



If it were me .. I think I would.

Why?

Because when you have a contract .. which is better any day, than a mere written offer of employment .. it supports there was good cause to quit and it was all attributable to the employer when they refused to listen to at least one email professionally pleading to be reasonable, but still chose to substantially alter the terms and conditions of hire .. without ever letting you know this might be a part of the deal.

It's North Carolina .. I know a hearing rep with the attorney supervision letter and I know where I'd go to investigate my quit for good cause to find my will to quit in North Carolina.

Mar 04, 2013
California UI Benefits
by: Anonymous

My current contracted was terminated (ended) but was offered a new employment contract that was 100% commission. The commission rates were so low that it would put my family in jeopardy so I did not accept. It was a HUGE difference in pay. Because my current contract was terminated, would I qualify for California UI benefits event though I did not accept the pity 100% commission? The Employer keeps saying that I resigned even though he terminated my contract. Why is this? Please help!


What the employer likely meant to say exactly is that you voluntarily resigned because you refused and offer of suitable, continuing work when you refused the new offer and contract.

Of course, I'd expect this sort of protest from an employer, but it does not diminish that you may have a valid legal like argument to collect benefits because the employer's new offer represents such a substantial change to the terms and conditions of employment as to make it unsuitable work .. thereby giving you the opportunity to prove good cause to quit (refuse) an offer of unsuitable work.

What California defines as suitable work.

If you'd asked your own question vs. a comment, I would of moved your question to this page about accepting a job.

Aug 30, 2012
Moved from Salary to Commission. Can I file?
by: Mr. B

Good Day,
My employer moved me from a salary to 100% Commission. Here's the structure: I am an employee of an electrical contractor that is Incorporated (they paid W-2 salary to me, shared health insurance, offered 401k). My job is sales for a sister LLC in renewable energy, and upon closed deals, would additionally pay me commissions (1099) and the contractor side would do the labor. The market is bad and my salary became a burden to the contractor side, and revenues were down on the LLC side. They decided to scale my salary down to commission-only; first by splitting my payroll checks (1/2 from the contractor and 1/2 pre-tax from the LLC to be taxed on my end), then I received checks at 50% of the previous pay rate from the LLC (all LLC checks were "commission advances"). I just received a final check and have no income from the company I still work 40/week for. Now that I'm considered "1099'd", can I file for unemployment insurance?

Thank you
Mr. B in Minnesota



I would of Mr. B .. however I don't think I'd expect any UI benefits .. now that the employer will probably claim you're totally self employed .. however again .. employers do not define what makes an employee and employee. The IRS and the individual states do .. with one or all portions of what they call the ABC test. You can find MN's in the coverage chartbook at the USDOL .. there's links all over this website to the UI law comparison chartbooks.

One more thing that may prevent you from collecting .. even if it is eventually determined you're still an employee and at least entitled to minimum wage .. your availability for work.

Partial unemployment benefits are not possible when you are working over .. well you can also find this information in the "monetary" chartbook at the USDOL

May 15, 2012
Base Pay to Commission only
by: JB

Came across this post...Looking for some much needed info. I have tried finding answers else where....NO HELP!!! So basically I Have just been told that my base pay + commission position is not going to be available at the end of the month. On paper (email) I am being offered a commission only position. This position will give a monthly check but it is projected based on a years worth of sales....if the projection falls short I have to pay back...of course on flip side i could get more at end of year. However, I have a family of 5 to support and do not think this is the most stable way to do so. I do not want to turn down a job but in this case I do not want to put my family in a bad position by owing money either. Could I qualify for Unemployment benefits if I turn this down until I find a job?

Thanks for any info in advance
JB



Can you specify which state? There might be a case law resource to look at.

Mar 20, 2012
Reply
by: Anonymous

Ok! So here is a twist! I have an email from my HR asking the companies lawyer if they have to pay me for 90 days. It also states that my termination date is march 19. (but I have yet to receive any letter from them directley to me) I know it seems a bit sneaky but please understand that's how this company works!
We had the conversation yesterday, I then decided to take a vacation this week to think about things! I am still waiting on the company to actually offer me something its up in the air! I haven't been fired nor truley offered a different position!
I emailed my boss last night due to one of my co-workers warning me, and his response was "I told him you had to make a decision if you were going on. commission or leaving us but that we didn't finalize." so where does the leave us? How should I reply to that email?





Does this have to do with your performance? Is there written documentation about your performance. Or, are you the only one not meeting quota? Or, are you simply the first employee to meet with this "strategy" to revert you to commission only status which isn't being instituted uniformly across the board until it comes time for an individual's performance review?

Mar 20, 2012
Reply
by: Anonymous

Thank you! I have a contract that states all of this with this company! It also states that they have to give me 90 days of notice. With that being said in one of my clause it also states I need to sell 1millon dollars in sales. Which I haven't not been able to due with the economye today! I have went on sales meetings etc and my bosses have been cc on the emails etc. but the sales just aren't there, so they have offered me a commission only position! But, here the kicker in their eyes I'm fired per my co-work who states my termenation date was march 19? But he will not say that I am fired he is waiting for me to pick! What do I do?




He's never going to tell you that .. because he wants you to quit as this is what shifts the burden of proof to you.

Were you ever written up for performance?

If you're going to resign .. and even if you think you've been fired.

Now's the time to counter document .. and by that I mean the devastation to the market you sell in .. possibly actual number that prove the employer originally overstated the market and therefore the quota in the contract being unreasonable?????

Understand that when you quit .. it has to be for good cause, but that at a hearing .. they will raise your performance as being the problem you couldn't meet sales goals and just upped and quit when they were justified to alter the terms per the contract because you were made aware of the consequences of not meeting quota at time of hire.

Hope this is making sense .. because it's often true that UI benefits and real life needs .. don't mesh.

I think, it's possible that all of this might be effectively counter documented in a very precise resignation letter, but understand that I'm just a woman sitting in complete darkness trying to explain the concepts of burdens and what may actually happen at unemployment appeal hearing.

I suspect the employer would respond to your unemployment claim as such ..

The claimant voluntarily quit when continuing work was available.

The resignation letter now becomes documentation for the UI dept. to explain the details and conditions under which you were forced to make the decision to quit, but the employer has nary an intention of admitting that it was a quit in lieu of termination.

Nonetheless, I think that contract is important to comb through for any weakness you may be exposed to right now.

I suppose you can't afford an attorney, but that would probably be the best course of action .. considering you do have an employment contract to consider.

Mar 20, 2012
happening right now to me
by: Anonymous

Hello,
I got a call from my boss yesterday telling me that the money just isnt there and the sales arent either. I was offered to go on a commision only wi t h this company but the sales dollars just arent there to even make this work. Welive payheck to paycheck. He is waiting for me to givehim my answe, but i have told him already that itwouldnt work....so i keep askinghim so am i fired or not and i get the sameresponse. I live in Ga,butthecompany is based out of fl, but i dont pay ga taxes. They still have me down as a fl, resident for some reason, not sure why. I get direct deposit. And they mail my paycheck stubs to me so i never had any problems.
Please let meknow what i needto do.
Thanks




If it were me, I'd be after something written that precisely details the change in the terms and conditions from those you originally accepted the job under.

Basically, if you're now working with a base plus commission and that's why you're able to live paycheck to paycheck you need something to help you estimate the actual reduction in pay the new terms will result in.

Only then can you make a decision as to whether you think you're safe with good cause to quit for a substantial reduction in pay and/or change in the conditions from time of hire.

PS. This isn't permission or a promise that you'll have good cause to quit ... it's just me telling you .. documentation is important to prove why you thought you had it.

If you're not going to take any of the other stuff I've said about giving the new terms a shot for a short time to gather documentary proof of the actual reduction in pay you'd experience with a couple paychecks .. seriously you still need to know that documentary evidence is what's important to force the unemployment department to believe you.



Jan 03, 2011
Moved to commission only eliminting base salary
by: Anonymous

Hi

I live and work in New Jersey. My company just notified me that they are moving me to a commission only pay model eliminating my base salary due to cash flow issues they are having. This is temporary for a few months. Can I collect unemployment?

Thanks





Hi,

Not unless the employer is simultaneously decreasing your hours and then the numbers would still have to compute for partial benefits .. that's tough to do when you are no longer receiving a base salary .. to use as to gauge to how much less you are earning each week .. now isn't it? .. I wonder why they decided to do this .. hmmmmm

Did they happen to provide a date eh-hem .. in writing that you will start to receive the base salary again and whether it will be the same amount you are receiving now?

Have fun trying to search the NJ statutes or finding an interpretation index such as NY has that might help guide you as to what to do.

NJ appears to have hidden their statutes again and have also recently moved to almost the very top of my list of states I like to pick on for "lack of informative information".


Remember this phrase.

Substantial changes to the conditions of employment.

You be careful now .. if you simply accept this change your apparent acceptance of the change becomes your problem when you are starving and thinking you need to quit .. six months down the road.

This is the reason I ask if they have put an end date down on paper for the short-term sacrifice they are asking you to make for a few months.



Mar 29, 2010
What should be my next step?
by: jason

My next question is how should I handle the proposed change for April 1? Should I accept the changes, resign, and/or let them know I intend on filing for unemployment? Thanks for your time!



When a change in pay structure represents a substantial reduction in pay .. you have to make a decision.

If you accept the change .. the acceptance will later serve to deny any benefits if should you have a change of heart later on.

The danger is that if a state doesn't provide a precedent which basically draws a line in the sand .. you will be hard pressed to be able to define "substantial".

Additionally, some states may also deny if they believe you didn't give it a chance and save paystubs to prove the substantial reduction.

In your case .. I would think that unless they are upping the commission amount, the reduction should be self evident. Doing this also raises the question of how much time would be considered "acceptance".

The issue isn't really one of getting paid less, but one of a substantial change in the conditions of employment and a change that asks whether you would have accepted the job in the first place if the change is what was offered at the beginning of employment.

In your case, I would say that what was agreed upon at the time you moved to Texas is what is important.

What you do is your decision alone. You will hardly ever find me telling someone flat out to quit.

It's a decision I would only feel comfortable making for myself .. because I would have the information needed to be able to weigh all the elements.

Mar 29, 2010
Texas but my employer is in CO
by: Anonymous

I live in Texas but work in CO. Was hired in CO and they agreed to keep me on when I moved to TX in hopes we could grow our territory.


Well then, you need to reference Colorado laws .. both states are stingy when it comes to giving benefits, but I'd call what's happening to you a substantial change in the conditions of employment.

If the employer didn't want you to be able to collect unemployment benefits I think they should have done something at the time you moved .. if it was for personal reasons.

Instead, what they did effectively alter the conditions under which you were hired and now regret that decision.

Here's a link to some Colorado precedents. I think "working conditions" seems most relevant now .. since your moving to Texas should no longer be a factor .. unless you have an employment contract.

And for good measure, here's the Texas Appeal Policy and Precedent Manual

Click here to add your own comments

Return to Unemployment Benefits Questions.