Almost all employers who use commissioned salespeople have an understanding with them regarding how commissions are earned; some even put this agreement into writing. Unfortunately, many do not state specifically when employees stop earning commissions. This can lead to expensive, unintended consequences in Texas.
Last month, the Texas Supreme Court in Perthuis v. Baylor Miraca Genetics Lab’ys, LLC, breathed new life into an old doctrine (the “procuring-cause” doctrine) that originally dealt with real estate broker commission agreements. In Perthuis, the court held that an at-will employee who receives a commission as part of his compensation continues to earn commissions on sales consummated after the employee’s termination if:
- The employee was the “procuring cause” of the sales, and
- The commission agreement between the employer and employee “is silent about any exceptions.”
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