Search This Site.

My employer gave me an option of accepting a layoff or accepting straight commission

by Rob

Employed at company for 5 years, 2 day warning of this due to employer losing a major client. Given the option of either accepting the layoff or going to a straight commission structure. Of course losing health benefits also. If I find I cannot survive financially on straight commission, can I file for unemployment benefits after a month or two?

Hi Rob

First you cannot have a valid claim for UI benefits unless you have become unemployed .. at least partially, as with a significant reduction in hours .. which makes partial benefits a possibility.

However, if you work your butt off every week trying to earn a commission comparable to your past earnings.. you're still employed and conditionally, would be ineligible to collect unemployment because you're also not able and available to look for or accept another job regardless of whether you earn any commission, or not.

When an employer changes the pay structure, such as your's is doing .. even for myself, it would be a quandary as to when, or if there is good cause to quit, because to continue working under such conditions, you have to accept the new terms and conditions.

There are unemployment precedent decision for this type of situation where a person has been denied because of "accepting" the new terms and conditions of employment and then staying to long to see if it works out .. thus negating the good cause that may of existed up to an undefined point when staying became a willing choice that is interpreted as acceptance.

On the other hand, you can find decisions which say the person didn't have good cause because they didn't give the new pay structure a chance such as you may need to prove the pay was a substantial reduction under the new terms.

As for what make for substantially less, most states have precedent decisions, or regulations (sometimes hard to locate online)
which establish how much less (usually a percentage in the reduction of pay) constitutes good cause for voluntarily quitting.

However .. straight commission vs. a base (which often meets at least minimum wage) plus commission seems to me, a bit harsh and possibly a tactic to get you to quit. It also sounds like something that could be even a bit dangerous for an employer if the arrangement happens to be in violation of the FLSA or a MN wage and hour law that might be even stricter about minimum wage.

If I were to decide to stay and see if the new pay structure might pay satisfactorily, I would make certain that when I accepted the employers new terms and conditions of employment, that I detailed my understanding of the changes being made and make my acceptance conditional upon a wait and see period of one .. maybe two pay periods in writing. Just so everyone knows from the gitgo that you're not really accepting the idea of straight commission without reservation, but a try it and see approach.

I'd document the new terms and conditions because I'd be concerned the employer would protest unemployment benefits like ...

The claimant voluntarily quit for personal reasons. Continuing work was available.

This is often the contrasting protest to avoid the cost of a legitimate lack of work claim, which does not have a legitimate protest to shift the blame to the employee.

Suffice it to say, I think switching someone from an non-exempt hourly rate or exempted salaried rate of pay is an employer strategy that works to get people to quit due to changes to a pay structure that works to severely reduce a person's compensation, or hours to manage a person out of a job by getting them to quit, or refuse the offer that can aid the employer in avoiding the long-term, but foreseen cost of a legitimate downsizing of force.

Click here to post comments

Return to Quitting and Unemployment.

} }