Gebhardt v Time Warner Entertainment-Advance/Newhouse
284 A.D.2d 978, 726 N.Y.S.2d 534 (4th Dep’t 2001)
Appellate Division, Fourth Department · June 8, 2001
What the court decided
A commission rate fixed when a deal was booked could not be reduced afterward: "When that deal was ‘booked,’ the commission rate was established at 13%, and defendant was not thereafter entitled to lower that rate after the 1995 deal was closed." An at-will employer may change the terms "only prospectively," so the reduced rate did apply to the following year’s business on the same account. Deducting from earned commissions also violated Labor Law § 193.
Who won
A win for the salesperson on the 1995 account, and for the employer on the later business.
Why it matters for salespeople
This is the case that draws the line precisely. The same account, the same customer, one rate before the change and another after — because the commission on the booked deal had already been earned, even though it had not yet been paid. A plan change reaches forward, never back.
Key passage: 284 A.D.2d 978 at 979.
Read the decision (PDF) Marked with official reporter pages for citation.
Source of the text: Caselaw Access Project, Harvard Law School Library (scan of the official Appellate Division Reports) — https://case.law/caselaw/?reporter=ad2d&volume=284&case=0978-01. This page summarizes the decision in plain language; the court’s own words are in the opinion below.
Where this case comes up in the guide
The opinion
Red markers such as [284 AD2d 000] show where each page of the official reporter begins. Gray markers such as [*2] are the slip opinion's own page markers.
[284 AD2d 978] —Order unanimously affirmed without costs. Memorandum: Supreme Court properly granted that part of plaintiffs cross motion for summary judgment on the breach of contract claim seeking commissions based on the sale of advertising time on cable television to the Fuccillo Auto Mall account in 1995. From March 1994 to August 1997 plaintiff was employed by defendant as an at-will employee. Plaintiff worked as a commissioned sales representative, selling advertising time on cable television and servicing advertisers’ accounts. According to plaintiffs affidavit in support of the cross motion and the [284 AD2d 979] parties’ sales commissions agreement, there were only two instances in which a vested commission could be denied: if a client failed to pay, or if an advertisement was aired after the termination of a sales representative’s employment. Neither exception is applicable to the 1995 Fuccillo account. When that deal was “booked,” the commission rate was established at 13%, and defendant was not thereafter entitled to lower that rate after the 1995 deal was closéd. Although plaintiff was an at-will employee, defendant nevertheless was entitled to change the terms of the employment agreement only prospectively, subject to plaintiffs right to leave the employment if the new terms were unacceptable (see, Bottini v Lewis & Judge Co., 211 AD2d 1006, 1007-1008). Because plaintiff remained in defendant’s employment after being informed that the commission rate was lowered, she is deemed to have agreed to prospective reduced commissions, which include the reduced Fuccillo commissions for 1996 (see, Bottini v Lewis & Judge Co., supra, at 1008).
The court also properly granted that part of plaintiffs cross motion seeking summary judgment on the Labor Law § 193 claim. The deduction of $375 per week from plaintiffs earned commissions was a violation of Labor Law § 193 (1) (see, Edlitz v Nipkow & Kobelt, 264 AD2d 437). Because plaintiff established that defendant willfully made the deduction, the court properly awarded plaintiff liquidated damages in addition to the attorneys fees to which she was entitled (see, Labor Law § 198 [1-a]; Gottlieb v Laub & Co., 82 NY2d 457, 459, rearg denied 83 NY2d 801). We have considered defendant’s remaining contention and conclude that it lacks merit. (Appeal from Order of Supreme Court, Onondaga County, Nicholson, J.— Summary Judgment.) Present — Green, J. P., Hayes, Hurlbutt, Scudder and Lawton, JJ.