KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Charging back salesmen for lost accounts / Comment on Guarantee conditions
December 3, 2018
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Charging back salesmen for lost accounts
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Ken,
Had a question. Can we put a clause in the sales rep employment agreement that they’ll be personally responsible for any chargebacks? So in case they quit the company and customers cancel within 12 months we can hold the sales reps responsible for the commission that was paid to them. We are in Texas.
Please post as
name it withheld.
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Response
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The short answer is yes, but you need to be very careful. Ordinarily an employer cannot withhold wages from an employee, and can’t require an employee to reimburse the employer for acts of the employee’s negligence. If, however, you have a true commission based compensation agreement and the sales person understands that commissions are merely draws, ultimately to be recalculated from time to time and adjusted based on clearly set standards, you can adjust the commission downward to reflect canceled accounts. The commission charge back should be proportionate to the loss and the charge back language needs to be precisely written so that there are no disputes.
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Comment on Guarantee conditions from article on November 14, 2018
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Jennifer and Ken
I read the Kirschenbaum newsletter every day and thought the issues in the Buy-Sell Agreement was very good- particularly the part about guarantees not being unconditional. The one problem with what you are suggesting as conditions is getting buyers to agree to all of them. I find most buyers are not ready to be told there can be limits to what they can do and so will agree to some but not all.
Liked the overall thrust though. Will hang onto this one.
Regards,
Victor Harding
Harding Security Services Inc.
Toronto , ON
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Response
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The series on the Agreements that you can expect to see when buying or selling your business ran from July 9 to July 14, 2018. Check them out on our website https://www.kirschenbaumesq.com/page/alarm-articles
Victor is referring to the article on November 14, 2018 which dealt with the Guarantee in the buy-sell agreement and conditions that should be included in the agreement.
Jennifer Kirschenbaum,Esq heads K&K's acquisition and merger team.b You can reach her at 516 747 6700 x 301 orJennifer@Kirschenbaumesq.com.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com