Unpaid Sales Commissions in Illinois May Warrant Punitive Damages...

In Illinois, a law known as the Illinois Sales Representative Act may force a "principal" (as defined in the Act) to pay unpaid commissions due plus punitive damages and attorneys' fees and costs. A very strong law to help unpaid sales reps.
 
March 28, 2009 - PRLog -- There is a little known law in Illinois called the "Illinois Sales Representative Act" which states that a "principal" who fails to timely make commission payments to a "sales represenative" is liable in a civil action for "exemplary damages" not exceeding 3 times the amount of the commissions owed to the sales representative and states that the principal "shall pay the sales representative's reasonable attorney's fees and court costs."
"Principal" is defined as a sole proprietorship, partnership, corporation or other business entity whether or not it has a permanent or fixed place of business in this State and which:

(A) Manufactures, produces, imports, or distributes a product for sale;

(B) Contracts with a sales representative to solicit orders for the product; and

(C) Compensates the sales representative, in whole or in part, by commission.

"Sales Representative" is defined as a person who contracts with a principal to solicit orders and who is compensated, in whole or in part, by commission, but shall not include one who places orders or purchases for his own account for resale or one who qualifies as an employee of the principal pursuant to the Illinois Wage Payment and Collection Act.

At least one Illinois Court has interpreted the mandatory award of attorneys' fees and costs in the event a principal fails to timely pay commissions due a sales rep. That Court found that the award of attorneys' fees and costs was not punitive in nature but was "compensatory." See Maher and Assoc., Inc. v. Quality Cabinets, 267 Ill.App.3d 69, 640 N.E.2d 1000 (2nd Dist. 1994). Therefore, principals beware--not only could you lose a matter brought against you for non-timely payment of commissions (and potentially be found liable for punitive, or exemplary damages, up to 3 times the amount of commissions due) but you may also end up paying the sales rep's attorneys' fees and costs which could, technically, exceed all commissions due.

In addition, at least one Court has interpreted the Illinois Sale Representative Act (the "Act") to hold that solicitation of orders occurring outside the State of Illinois after 1990 is covered by the Act. See Circuit Systems, Inc. v. Mescalero Sales, Inc., 925 F.Supp. 546, 549 (N.D. Ill. 1996). That is, so long as the constitutional minimum contacts test is satisfied, such "foreign" orders shall fall under the protection of the Act. See id.

If you meet the definition of a "sales representative" and are due commissions, collecting any unpaid commissions and enforcing the Act so as to recover any attorneys' fees and potential punitive damages is a legal process by which an experienced attorney can assist. Principals who have been sued by sales reps may have defenses available.

Visit http://www.CounselorOffices.net to learn more.

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Philip Berenz is a Chicago trial attorney truly committed to assisting individuals and businesses with securing all available remedies and compensation for injuries and disputes and defending them when necessary. Visit http://www.CounselorOffices.net to learn more.
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