H. Steps to Take if you are Fired

A principal may have the right to fire you, but you could be entitled to damages, depending on the circumstances. Implement the following strategies when you are fired or believe you are about to be fired:

1.Insist on receiving a final statement of commissions and other benefits to determine if you are owed any money.

2.Know the law regarding the prompt payment of commissions. Sales reps in 32 states are entitled to receive their final commissions shortly after being fired. These states have sales rep protection laws for independent contractors which can be used to your advantage. In many states, a company's failure to pay you earned commissions within a short period of time (say 10 days) after termination may enable you to collect damages up to three times the amount of actual money owed, plus reasonable attorney fees, costs, and interest, if the case proceeds to litigation and is not settled before a judge's or jury's verdict. Many of these state laws also require the parties to have written agreements specifying how commissions are earned and when they are due.

Speak to a knowledgeable lawyer to learn whether your state has enacted a sales rep statute where applicable.

3.Send a detailed letter demanding unpaid commissions. This should be done by certified mail, return receipt requested, to document your claim and prove delivery. Such a demand can "start the clock" for the purposes of determining the number of days that commissions remain unpaid and put the company on notice that additional damages and penalties may be owed for a continued breach.

4.Consider litigation to collect what is due for large claims. If you are owed a small amount of money (i.e., less than $3,000), consider instituting proceedings in small-claims court. Recognize, however, that since you may be permitted to bring suit only in the county where the principal resides or has its main office, the travel and incidental expenses involved may not make it worthwhile to pursue your rights when small sums are involved and the company is out-of-state.

Counsel Comments:If you live and work in a state with a sales rep protection statute, consider litigation in a higher court since attorney fees and costs can be awarded in addition to double or triple damages.

5.Never sign a release or cash a commission check marked "payment in full" without first speaking to a lawyer. In some states, your cashing a check will preclude you from recovering anything further, despite writing protest language ("Under Protest") on the face or back of the check.

6.Seek legal advice before taking action. This is essential to receive an accurate opinion regarding your case's chances of success. The lawyer you consult should be an experienced attorney with particular knowledge of problems typically encountered by independent contractors. At the initial interview, bring all pertinent written information, including contracts, letters of intent, company memoranda, shipping lists, invoices, and commission statements. Tell the lawyer everything related to the problem since all communications are privileged and this will save time and make it easier for him or her to evaluate your case.

Once the lawyer receives all pertinent facts, he or she should then:

--Decide whether your case has a fair probability of success considering the law in the state in which the suit will be brought;

--Give you an accurate estimate as to how long the lawsuit will take; and

--Make a determination of the approximate legal fees and disbursements.

If your lawyer sees weaknesses in your case and believes that litigation will be unduly expensive, or if he desires to try to settle the matter without resorting to time-consuming litigation, he may elect to send an initial demand letter. Commission disputes are sometimes settled quickly out of court between lawyers for both sides after such a letter is sent. The letter on page 49 illustrates what a demand letter from a lawyer may state.

In any event, the chosen course of action should be instituted without delay so you will be able to receive remuneration as quickly as possible. This will also ensure that the requisite time period in which to start the action, the statute of limitations, will not have expired.

Strategies about how to hire a lawyer and work effectively with one are explained in greater detail in Chapter Ten.

Tip:Many of the concepts discussed in this section to help salespeople are also applicable for consultants and other independent contractors. Thus, review all these strategies for your protection where applicable.