Put a hold on all employment offer letters!

The Texas Supreme Court just issued an important opinion on the payment of commissions to employees. The employer’s failure to simply insert one extra paragraph in an offer letter resulted in a whopping verdict against it of $962,336.89 for unpaid commissions, $80,282.63 in prejudgment interest, and postjudgment interest at 5%, to say nothing about attorneys’ fees! To avoid this fate, read on.

The offer letter

Thomas Perthuis was offered a job by Baylor Miraca Genetics Laboratories. His position? Sell the company’s genetic tests. His title? Vice president of sales and marketing. His salary? $145,000 a year on at at-will basis. His commissions? 3.5% of net sales. And that was that. There was no other explanation on any of the terms. There was just a “Period. Full Stop!” And that is where the trouble started and ended.

‘I closed the deal!’ is met with ‘You’re fired!’

Perthuis closed a big deal. In fact, it was the largest order of its type in the history of the company. He relayed his success to company management on January 18, 2017. The CEO immediately requested a meeting the following Monday. But alas, it was not colorful balloons and confetti that greeted Perthuis; it was a pink slip. The very next day, the deal was signed by the company and the client.