Indianapolis Litigation

It’s not often that we at Alerding Castor Hewitt, LLP run into issues regarding the payment of commissions for our business law, SaaS law, and Indiana technology clients.  When the subject does arise, however, it usually occurs when an employee separates from employment and makes a wage claim for unpaid commissions.  The debate about whether the commissions are wages centers on whether the employee was entitled to the commission at the time of sale OR when the client pays for the product, service, etc.  Employers often want to argue that the latter applies, and for two obvious reasons:  (1) they want to avoid the penalties for unpaid wages, and (2) it can be economically difficult if not impossible to pay a commission if you don’t have the funds available because you are waiting on the client(s) to pay.

A recent decision by the Indiana Court of Appeals this week illustrates the issue.  On Wednesday, the Court issued its for-publication decision in Wells Fargo Insurance, Inc. v. Land, No. 48A02-0911-CV-1099.  The facts are fairly straight forward. Mr. Land sold crop insurance for Wells Fargo.  After Mr. Land separated from Well Fargo to start his own business, Wells Fargo sued Mr. Land for violating a covenant not to compete.  Mr. Land counterclaimed for unpaid commissions.  Wells Fargo argued that the unpaid commissions were not earned until after a farmer paid the insurance premium and relied on a written plan or policy to support its position.  In contrast, Mr. Land presented evidence – including deposition testimony from a manager – that he was never advised of this policy and was unaware that the policy existed.  Mr. Land won at the trial level and on appeal.

In addressing the issue on appeal, the Court of Appeals noted the general rule that a party is entitled to commissions right away on business that he/she has secured regardless of when payment is received by the employer.  The Court also noted that this general rule can be altered by written agreement or conduct of the parties.  Ultimately, the Court concluded that Wells Fargo’s policy did not alter the general rule because Mr. Land was neither aware of nor apprised of the policy on commissions.