Dealer Pay Plan Litigation: Sales people suing the dealership for wages

hong kong

Sales people lawsuits

I authored a similar post on this issue in May of 2009. Please click here to review that post.

One area of litigation drive addressed in my ears as an attorney is the area of salespeople suing the dealership for improperly calculating wages.
The starting point in this analysis is the pay plan. Then once the pay plan is looked at closely one must examine the method by which the pay is calculated to see if this method of calculation is consistent or inconsistent with the pay plan.

Very poorly worded pay plans can lead to significant litigation results against the dealership principle or the Corporation. As an example if it fails to properly define profit or properly define cost or to find any other term which is involved in the calculating of the commission. In New Jersey any ambiguity in the wording is construed against the drafter of the agreement meaning the selling dealership. Thus, employees make an argument of that profit includes other items which might be ambiguous based on a reviewing of the pay plan. The same might be true for costs. Whether or not a cost to be assessed to a vehicle might be ambiguous based on the pay plan.


The next step would be to look at the method by which the commission is calculated. This can get dicey sometimes only because many dealerships don’t provide the salespeople or the sales staff with a detailed breakdown indicating the cost, and all of the extras which have reduced the gross commissionable proceeds. The lower the gross commissionable proceeds the lower the profit the lower the commission.

Obtaining the specifics of the calculation of the commissions can be difficult. Frequently I’ve instituted suit on the basis of requesting an accounting of the transactions as the dealership has failed to provide an adequate explanation of the commissions which have been paid out over many years. This can be done either on individual or class action basis. These cases are ideally suited for class-action’s because the dealer is usually engaged in the identical calculations of profit, costs and gross commissionable proceeds on each and every transaction. One would argue this is the very definition of class action certification threshold.

Once you have commenced suit it is imperative to look at the back screens to determine all of the extras costs and other items which have been included in the profit and or included in the cost structure as defined by the dealership when they set up the computer program. Usually, the dealership uses either ADP or Reynolds and Reynolds as these are usually customarily installed in the dealerships. There are other types of software but the industry is dominated by ADP and Reynolds and Reynolds.