South Carolina Lawyer
Vol. 14, No. 2, Pg. 36.
Show me the Money! Post-termination payment of the commissioned salesperson
36Show me the Money! Post-termination payment of the commissioned salespersonBy Mark M. Trapp and Peter A. RutledgeIn South Carolina, a company that compensates its sales force with commissions faces two statutory vehicles available to commissioned salespeople to pursue the collection of any unpaid commissions upon separation. The first of these is the Payment of Wages Act, S.C. Code Ann. § 41-10-10, et seq., (Law. Coop. 1976 & Supp. 2001) (Wage Payment Act). The second, and less common, vehicle is the Payment of Post-Termination Claims to Sales Representatives Act, S.C. Code Ann. § 39-65-10, et seq., (Law. Co-op. 1976 & Supp. 2001) (Sales Rep Act). While substantially the same, there are differences that may not be apparent upon a casual reading of the statutes. This article discusses some of the subtle yet important differences between these statutes and highlights some of the relative benefits and pitfalls of proceeding under and defending against each. Under either approach, the company must be prepared when the separated commissioned salesperson says to his former employer: "Show me the money!"
38 Timing and coverage
Initially, the courts of this state apparently are more familiar with claims brought under the Wage Payment Act. Indeed, a South Carolina appellate court has yet to construe directly the Sales Rep Act in its more than 14-year existence, while the Wage Payment Act appears in several reported decisions that flesh out its construction. This scarcity of authority may result from the difficulty in satisfying the relatively restrictive definitions found within the Sales Rep Act, discussed below.
Under the Wage Payment Act, an employer must "pay all wages due ... within 48 hours of the time of separation or the next regular payday which may not exceed 30 days." S.C. Code Ann. § 41-10-50. If the employer disputes that a portion of the wages is owed, the employer must still give written notice to the employee of the wages which it concedes is due within the same time limit. S.C. Code Ann. § 41-10-60. By contrast, the Sales Rep Act provides only that upon termination "the principal shall pay the sales representative all commissions that have or will accrue under the contract. . . " S.C. Code Ann. § 39-65-20. Presumably, most courts would allow for a reasonable time, perhaps as many as 30 days, for the payment of any commissions due, before finding a violation of the Sales Rep Act. By way of analogy, one federal court has said that "[a] short delay in the payment of wages does not violate the Payment of Wages Act." Williams v. Grimes Aerospace, 988 F.Supp. 925, 941 (D.S.C. 1997). It is likely that South Carolina state courts would hold likewise under the Sales Rep Act. 38
Turning to the coverage of the two statutes, it is important the South Carolina Supreme Court has held that independent contractors are not included within the terms of the Wage Payment Act. Adamson v. Marianne Fabrics, Inc., 301 S.C. 204, 391 S.E.2d 249 (1990). However, the Court also held that whether one was an employee or an independent contractor is a jury question. Moreover, as in other contexts, the contract between the parties will not control - in Adamson the contract characterized the plaintiff as an independent contractor.
Next, practitioners should note that the Sales Rep Act by its terms forbids the "bringing" of an action under the Wage Payment Act if a claim has been brought under the Sales Rep Act, providing in relevant part, "[a]ny person bringing an action under the provisions of this chapter may not bring an action under the provisions of § 41-1010." S.C. Code Ann. § 39-65-80 (Law. Co-op. 1976 & Supp. 2001).
Whether the language of § 39-65-80 precludes a litigant from even initiating the alternative cause of action or simply limits a plaintiff to a single recovery is debatable. One argument is that the express wording of the statute prohibits one from filing suit under the Wage Payment Act if she has already instituted a suit under the Sales Rep Act. This literal reading of the statute also finds support in a footnote from an opinion of the Supreme Court. In Adamson v. Marianne Fabrics, Inc., 301 S.C. 204, 207, 391 S.E.2d 249, 250 at fn.1 (1990), the Court found that the language of the statute "prohibits any person proceeding under [the Sales Rep Act] from proceeding under § 41-10-10" (emphasis added). Generally, such a wooden application of the language elevates form over substance.
The better interpretation would allow a plaintiff to bring both causes of action and later elect her remedy, if appropriate. This approach harmonizes with Rule 8 of the South Carolina Rules of Civil Procedure, which provides, "[a] party may set forth two or more statements of a cause of action or defense alternatively or hypothetically.... A party may also state as many separate causes of action or defenses as he has regardless of consistency." It would also be more practical...