September 18, 2007
James Cockrum

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