Question about sales jobs

[Namtilal]

I would like to ask the following question to anyone who knows about commissioned sales jobs.

I am looking at a job as a wine sales representative for a distributor. It only pays commission. They sent me their introductory package, and it includes the following clause:

***Invoices that remain unpaid and determined uncollectible will result in a “Shared Loss” – a deduction of 40% of the invoice (including initial commission deduction)(Distributor bears 60% loss)

That is, if I sell $1000 worth of wine to a restaurant that goes out of business and doesn't pay, I am required to reimburse the distributor $400. $100 of this is the commission I would have earned, but I owe, out of pocket, another 30%.

There are so many reasons that this is bad, I don't even know where to start. My question is, has anyone ever heard of a requirement like this? It looks like they will refuse to remove the clause, and I will not be taking the job.

(If this question doesn't fit the purpose of this board, please delete it.)

[OZZIE4DUKE]

I would like to ask the following question to anyone who knows about commissioned sales jobs.

I am looking at a job as a wine sales representative for a distributor. It only pays commission. They sent me their introductory package, and it includes the following clause:

***Invoices that remain unpaid and determined uncollectible will result in a “Shared Loss” – a deduction of 40% of the invoice (including initial commission deduction)(Distributor bears 60% loss)

That is, if I sell $1000 worth of wine to a restaurant that goes out of business and doesn't pay, I am required to reimburse the distributor $400. $100 of this is the commission I would have earned, but I owe, out of pocket, another 30%.

There are so many reasons that this is bad, I don't even know where to start. My question is, has anyone ever heard of a requirement like this? It looks like they will refuse to remove the clause, and I will not be taking the job.

(If this question doesn't fit the purpose of this board, please delete it.)

Um, NO! This is grossly unfair to the salesman. The distributor extends the credit to the customer, not you, the salesman. They do so at their risk, not yours. Do you have the option of requiring payment either in advance or COD? At only a 10% commission rate there is no way I would work with that potential liability, unless the anticipated commissions were so great that the occasional loss was inconsequential. And don't forget, the loss of the hypothetical $1000 for the wine sold includes their profit margin, which I would imagine is far greater than the 10% they are paying you, probably 25 to 40%, so their actual loss would only be their cost of the wine, maybe $500 to $600. So you covering $300 of their lost profit reduces their loss to almost nothing. As I said, it is grossly unfair to the salesman and a really good deal for the distributor.

[-jk]

Doesn't sound much like a sales job. More like a middleman reseller.

-jk

[Jim3k]

Not entirely certain, and state rules vary, but most state constitutions have provisions that require that an employee be fully paid for his work. Therefore, the employer is not permitted to deduct its business expenses or any other thing from the wage.

I'd check with your state labor commissioner or labor department, because I'm not certain how the rule is applied with regard to commission salespeople. If they are not considered employees, but independent contractors, the clause may be OK. But just recently the Supreme Court held that pharmaceutical sales people were employees entitled to overtime because they were not outside sales people (being mostly on the phone, I'd guess). I believe they were on commission, as well. I suspect your job is closer to the pharmaceutical people than to an independent contractor.

Run that clause by the state labor people and see what they say. Then decide if you want to work for the company. You could use it for negotiation, but probably not a practical choice. Or, you can keep your knowledge to yourself until you need to invoke it. Finally, you could blow the whistle on the company and look elsewhere, while feeling you have done some public good. At least the other sales staff members wouldn't have to deal with it. Feeling altruistic?


Edit: BTW, I believe Ozzie has sold cars on commission (and may still), so his experience is worth knowing about.

[Namtilal]

Thanks for your replies. I told the GM that I wanted the job if they remove the clause, and he sent me a long explanation of their commission structure that has nothing to do with the issue, and made several non sequiturs that didn't help explain the situation. I have drafted him an email with many specific questions about the implementation of the policy.

I will also be calling the BBB and maybe state AG's office (?) tomorrow to see if this is even legal in CA. Yes, I would be an independent contractor, so it is probably legal as long as I agree to it.

[OZZIE4DUKE]

Edit: BTW, I believe Ozzie has sold cars on commission (and may still), so his experience is worth knowing about.

I sold cars for 6 weeks in 2003, so that's not particularly where I'm coming from. I've been an independent contractor and self employed on straight commission since 1995. Today, I earn commission from one company that I sell for and am a VAR or a straight distributor for all the other products I sell. As a VAR (Value Added Reseller) or distributor I buy and resell the products, so any and all loss from a nonpayment is mine. I have to pay for the products when I buy them; if my customer doesn't pay me I'm 100% screwed. I deal with both private and commercial entities (individual people and companies, both large and small). I dictate my terms of sale - most customers pay me either at the time of order or C.O.D. I don't, and can't, extend credit to my customers. If a company insists on doing business on credit (Net 30), I typically move on without the sale - it's far cheaper to lose the margin I didn't make than to eat the cost of the products I buy for them.

[Genedoc]

One aspect of the job that many of you are missing is that it's alcohol related. As a wine retailer in NC, I can attest the laws regulating alcohol sales being byzantine, idiosyncratic, and as different from state to state as any laws can be.

As for it being "not much of a sales job, more like a middle man reseller" - that's exactly what it is and the original poster said as much in his opening. "I am looking at a job as a wine sales representative for a distributor." Distributors are middle man resellers. They're the link between importer and retailer, a forced monopoly that allows for alcohol and wine to be taxed repeatedly before it hits your table.

If you're getting into it because you love the wine industry, there are better places to learn the wine industry than a distributor IMHO. If you're getting into it for money, I've no clue what the standards are in your state. I love the wine industry and the wine world, but distributors are low on my priority list for places to work in the wine business.

[Namtilal]

I agree with your criticisms of the job, Genedoc. It's not what I want to do, but there are limited jobs available in wine production that are within a normal commute from my current home. I could relocate, which I don't want to do, or I could try a soul-crushing job like this that offends my love of a free-market wine economy. Hard to find a decent paying job as a winemaker who is far from a critical mass of wineries.

Anyway, after a bit of back and forth, I told them I could not accept this job with that clause in place. They are evaluating whether they will waive it for me, which I don't expect them to do. Oh well...

[ThePublisher]

Way to stand strong and not sell out.I employee six independent contractor magazine sales reps.If we don't collect from a customer the rep doesn't get commission,but in no way are they responsible for the loss.That's a terrible policy, even if it is just to push you to collect payment.