Virginia Supreme Court Declares Wage Theft Law Excludes Commission Payments

The Virginia Supreme Court has recently ruled that the state’s wage theft statute does not extend to employee commissions. This decision clarifies the legal interpretation of the term “wages,” which the court determined is typically distinct from commissions.

In its ruling, the Virginia Supreme Court emphasized that the legislature did not explicitly or contextually include commissions within the definition of “wages” as outlined in the statute (Code § 40.1-29). The court stated, “A plain language reading of the statute, therefore, suggests that the General Assembly did not intend to include commissions in the statute, because the word is not in the statute.” This interpretation reversed a previous judgment made by the Court of Appeals in a case involving employees of a construction company.

The case involved five former employees of JES Construction. Among them, four were tasked with selling construction services directly to prospective customers, while one employee was responsible for repairing installations and selling additional goods and services. Notably, four of the plaintiffs were compensated solely through commissions, while one received a combination of commissions and other forms of compensation.

The commission structure at JES Construction was set at 10% of the gross price of the sales made by the employees. The company paid half of the commission after the three-day rescission period had elapsed, finalizing the contract. The remaining portion was paid once the job was completed and the customer had made the final payment.

However, the plaintiffs often faced significant delays in receiving their full commissions. These delays were attributed to various factors, including the engineering and permitting phases of the contracts. Additionally, four of the five plaintiffs signed an agreement with JES stating that commissions would be paid up to 14 days after their employment ended, with no further commissions to be paid after that period.

The plaintiffs contended that JES failed to pay them the commissions owed after their departure from the company, claiming they were owed thousands of dollars in earned but unpaid commissions. They argued that their commissions were indeed earned once the customer’s three-day rescission period concluded, asserting that JES’s refusal to pay constituted wage theft. They maintained that commissions should be classified as wages under the wage theft statute.

In response, JES argued that the wage theft law does not apply to commissions. A circuit court sided with JES, concluding that the statute does not cover commissions. However, the plaintiffs appealed this decision to the Court of Appeals, which reversed the ruling. The Court of Appeals held that the term “wages” as used in the wage theft statute does apply to commissions, basing its conclusion on the statute’s remedial purpose, previous interpretations of “wages” in other contexts, and an interpretation by an administrative agency found in a field manual.

Ultimately, the Virginia Supreme Court has ruled that the Court of Appeals erred in its interpretation, reaffirming that commissions are not included under the state’s wage theft statute.

Topics
Legislation
Fraud
Virginia

The Virginia Supreme Court has recently ruled that the state’s wage theft statute does not extend to employee commissions. This decision clarifies the legal interpretation of the term “wages,” which the court determined is typically distinct from commissions.

In its ruling, the Virginia Supreme Court emphasized that the legislature did not explicitly or contextually include commissions within the definition of “wages” as outlined in the statute (Code § 40.1-29). The court stated, “A plain language reading of the statute, therefore, suggests that the General Assembly did not intend to include commissions in the statute, because the word is not in the statute.” This interpretation reversed a previous judgment made by the Court of Appeals in a case involving employees of a construction company.

The case involved five former employees of JES Construction. Among them, four were tasked with selling construction services directly to prospective customers, while one employee was responsible for repairing installations and selling additional goods and services. Notably, four of the plaintiffs were compensated solely through commissions, while one received a combination of commissions and other forms of compensation.

The commission structure at JES Construction was set at 10% of the gross price of the sales made by the employees. The company paid half of the commission after the three-day rescission period had elapsed, finalizing the contract. The remaining portion was paid once the job was completed and the customer had made the final payment.

However, the plaintiffs often faced significant delays in receiving their full commissions. These delays were attributed to various factors, including the engineering and permitting phases of the contracts. Additionally, four of the five plaintiffs signed an agreement with JES stating that commissions would be paid up to 14 days after their employment ended, with no further commissions to be paid after that period.

The plaintiffs contended that JES failed to pay them the commissions owed after their departure from the company, claiming they were owed thousands of dollars in earned but unpaid commissions. They argued that their commissions were indeed earned once the customer’s three-day rescission period concluded, asserting that JES’s refusal to pay constituted wage theft. They maintained that commissions should be classified as wages under the wage theft statute.

In response, JES argued that the wage theft law does not apply to commissions. A circuit court sided with JES, concluding that the statute does not cover commissions. However, the plaintiffs appealed this decision to the Court of Appeals, which reversed the ruling. The Court of Appeals held that the term “wages” as used in the wage theft statute does apply to commissions, basing its conclusion on the statute’s remedial purpose, previous interpretations of “wages” in other contexts, and an interpretation by an administrative agency found in a field manual.

Ultimately, the Virginia Supreme Court has ruled that the Court of Appeals erred in its interpretation, reaffirming that commissions are not included under the state’s wage theft statute.

Topics
Legislation
Fraud
Virginia