Business Court Rules on Post-Termination Commissions

(August 1, 2016) The Michigan Sales Representatives’ Commissions Act (“SRCA”) provides for enhanced damages if an employer intentionally fails to pay sales commissions when due. The Kent County Specialized Business Docket (“Business Court”) recently addressed the issue of enhanced damages for post-termination sales commissions in the case of Grado, Inc. v. Zebra Skimmers Corporation.

In the case, Zebra Skimmers Corporation (“Zebra Skimmers”) failed to pay post-termination sales commissions to Grado Inc. (“Grado”) when due. Zebra Skimmers argued it was not obligated to pay any further commission to Grado because Grado’s president breached its code of ethics. However, the Business Court held that nothing in the code of ethics that authorized Zebra Skimmers to deny Grado post-termination commissions and Grado was thus entitled to enhanced damages under SRCA because the failure to pay the commission when due was “intentional.”

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