AB438: Bill Text

LRB-2262/2

GMM:mfd:jf

1997 - 1998 LEGISLATURE

1997 Assembly BILL 438

June 24, 1997 - Introduced by Representatives Urban, Vrakas, Hoven, Turner, Duff, Powers, M. Lehman, R. Young, Johnsrud, Musser, Cullen, Schneider, Goetsch, Porter, Black, L. Young, Ott, Albers, Notestein, F. Lasee, Kaufert, Springer, Plale, Hahn, Baldwin and Riley, cosponsored by Senators Grobschmidt, Huelsman, Shibilski, Farrow and Roessler. Referred to Committee on Labor and Employment.

AB438,1,10 An Act to renumber 109.01 (1); to amend 109.01 (3), 109.01 (4), 109.03 (2), 109.03 (3), 109.03 (4), 109.03 (5), 109.03 (6), 109.03 (7) (title), 109.09 (1), 109.09 (2), 109.11 (1) (a), 109.11 (2) (a), 109.11 (2) (b), 109.11 (3), chapter 135 (title), 135.01, 135.02 (intro.), 135.025 (1), 135.025 (2) (intro.), 135.025 (3), 135.05, 135.06, 135.065 and 135.07 (intro.); and to create 109.01 (1m), 109.01 (1p), 109.03 (2g), 109.03 (2m), 109.03 (4g), 109.11 (1m), subchapter I (title) of chapter 135 [precedes 135.01] and subchapter II of chapter 135 [precedes 135.20] of the statutes; relating to: the payment of wages and commissions owed to employes and commission salespersons whose employment ends, the termination or alteration of sales representative agreements and providing penalties.

Analysis by the Legislative Reference Bureau

Under current law, an employer, including the state, must pay an employe whose employment ends and to whom wages are owed within certain time periods depending on the circumstances under which the employment ends. Specifically, an employe, except a sales agent employed on a commission basis, not having a written contract for a definite period, who quits his or her employment or who is discharged from employment must be paid in full by no later than the date on which the employe regularly would have been paid under the employer's established payroll schedule or, subject to certain exceptions, within 31 days after the employment ends, whichever is earlier. Also, in the case of an employe who dies, the full amount of the employe's wages due must be paid to the employe's spouse, child or other dependent on demand. In addition, if an employe is separated from the payroll of the employer as a result of the employer merging, liquidating, ceasing business operations or relocating, the employer must pay all unpaid wages to the employe within 24 hours after the time of separation.

Under current law, an employe who has a wage claim may file the wage claim with the department of workforce development (DWD), which may attempt to settle and compromise the wage claim or sue the employer on the employe's behalf to collect the wage claim, or the employe may commence an action in circuit court in his or her own behalf to collect the wage claim without first filing the wage claim with DWD. If a wage claim action is commenced in circuit court before DWD has completed its attempt to settle and compromise the claim, the circuit court may order the employer to pay, in addition to the amount of wages unpaid and in addition to or in lieu of any criminal penalties for which the employer may be liable, increased wages of not more than 50% of the amount of wages unpaid. If a wage claim action is commenced in circuit court after DWD has completed its attempt to settle and compromise the claim, the circuit court may order the employer to pay, in addition to the amount of wages unpaid and in addition to or in lieu of any criminal penalties for which the employer may be liable, increased wages of not more than 100% of the amount of wages unpaid.

This bill extends the wage payment law to commission salespersons whose employment ends. Specifically, the bill requires an employer, including the state, to pay wages as follows:

1. To an employe, including a sales agent employed on a commission basis other than an insurance agent, not having a written contract for a definite period, who is discharged from employment immediately upon the demand of the employe.

2. To an employe, including a sales agent employed on a commission basis other than an insurance agent, not having a written contract for definite period, who quits or resigns his or her employment on demand by no later than 5 days after the employe quits or resigns.

3. To an employe, including a sales agent employed on a commission basis other than an insurance agent, having a written contract for definite period, who gives not less than 5 days' notice of his or her intention to quit or resign his or her employment on demand by no later than 24 hours after the employe quits or resigns.

4. To an employe, including a sales agent employed on a commission basis other than an insurance agent, having a written contract for a definite period, who gives less than 5 days' notice of his or her intention to quit or resign his or her employment on demand by no later than the date on which the employe regularly would have been paid under the employer's established payroll schedule or, subject to certain exceptions, within 31 days after the employment ends, which ever is earlier.

5. To a commission salesperson, other than an insurance agent or broker, who is an independent contractor rather than an employe (commission salesperson) and who gives not less than 5 days' written notice of his or her intention to resign his or her position or whose contract of employment is terminated, cancelled or nonrenewed by the employer on demand by no later than 3 working days after the commission salesperson's last day of employment.

6. To a commission salesperson who gives less than 5 days' notice of his or her intention to resign his or her position on demand by no later than 6 working days after the commission salesperson's last day of employment.

7. To the spouse, child or other dependent of a commission salesperson who dies on demand.

8. To a commission salesperson who is separated from the payroll of an employer as a result of the employer merging, liquidating, ceasing business operations or relocating on demand by no later than 24 hours after the time of separation.

Under the bill, the wages to which a commission salesperson is entitled on the ending of his or her employment are all commissions earned though the last day of employment, which is defined in the bill as commissions owed for any sale of goods made by the commission salesperson and approved by the employer on or before the last day of employment or for any sale of services made by the commission salesperson and delivered to and accepted by the customer on or before the last day of employment.

Also, under the bill, if the employe or commission salesperson whose employment ends was entrusted with money or property, the employer has 10 working days after the employe's or commission salesperson's last day of employment to audit and adjust the accounts of the employe or commission salesperson. In that case, the employe or commission salesperson may not demand his or her wages until after the expiration of the 10-day period.

In addition, under the bill, if an employer fails to pay an employe, on demand, within the applicable time period specified in the bill, DWD or a circuit court may order the employer to pay to the employe, in addition to the amount of wages due and unpaid and in addition to or in lieu of the increased wages and criminal penalties specified under current law, increased wages in the amount of the employe's average daily earnings for each day for which the employer is late in paying the employe's wages. Similarly, if an employer fails to pay a commission salesperson, on demand, within the applicable time period specified in the bill, DWD or a circuit court may order the employer to pay to the commission salesperson, in addition to the amount of wages due and unpaid and in addition to or in lieu of the increased wages and criminal penalties specified under current law, increased wages in the amount of one-fifteenth of the commission salesperson's commissions earned through the last day of employment that remain unpaid for each day for which the employer is late in paying the commission salesperson's wages.

Under current law, no person who grants a dealership (grantor), that is, a contract by which a dealer is granted the right to sell or distribute goods or services or to use a trade name, trademark, service mark, logotype, advertising or other commercial symbol, may terminate, cancel, fail to renew or substantially change the competitive circumstances of the dealership without good cause, that is, failure by the dealer to comply substantially with essential, reasonable and nondiscriminatory requirements imposed by the grantor or bad faith by the dealer. Also, under current law, a grantor must give a dealer 90 days' notice of termination, cancellation, nonrenewal or substantial change in competitive circumstances, stating the reasons for that action and giving the dealer 60 days in which to rectify any claimed deficiency, except that, if the reason for that action is the nonpayment of sums due under the dealership agreement, the dealer has only 10 days to cure the default and that, if the reason for the action is the dealer's insolvency, bankruptcy or an assignment for the benefit of creditors, the notice provisions do no apply.

This bill provides similar coverage for sales representative agreements, that is, contracts by which a sales representative is granted the right to represent, sell or offer for sale the goods of a manufacturer, wholesaler or importer by use of a trade name, trademark, service mark, logotype, advertising or other commercial symbol. The bill defines a "sales representative" as a person who contracts with a principal to solicit wholesale orders, that is, orders for goods to be ultimately sold at retail, and who is compensated by commission, but excludes from that definition an employe of the principal, a person who purchases goods for his or her own account for resale, a person who holds goods on consignment for resale, a person who sells goods to end users and not for resale and a person who is an insurance agent or broker.

Under the bill, no manufacturer, wholesaler or importer may terminate, cancel, fail to renew or substantially change the competitive circumstances of a sales representative agreement without good cause, which is defined in the bill as any of the following:

1. A material breach of a written sales representative agreement.

2. In the absence of a written sales representative agreement, a failure by the sales representative to comply with any material, reasonable and nondiscriminatory requirements of the manufacturer, wholesaler or importer.

3. The nonpayment of any sums due under the sales representative agreement.

4. The bankruptcy or insolvency of the sales representative.

5. An assignment for the benefit of creditors or similar disposition of the assets of the sales representative's business.

6. The voluntary abandonment by the sales representative of his or her business with no provision made for the resumption of that business by the sales representative or for the continuation of that business by a transferee of the sales representative.

7. The conviction of the sales representative for any offense the circumstances of which substantially relate to the circumstances of the sales representative's business.

8. Any act by the sales representative that materially impairs the good will associated with the manufacturer's, wholesaler's or importer's trade name, trademark, service mark, logotype, advertising or other commercial symbol.

In addition, under the bill, a manufacturer, wholesaler or importer must give a sales representative 90 days' notice of termination, cancellation, nonrenewal or substantial change in competitive circumstances, stating the reasons for that action and giving the sales representative 60 days in which to rectify any claimed deficiency, except that, if the reason for that action is the nonpayment of sums due under the sales representative agreement, the sales representative has only 10 days to cure the default and that, if the reason for that action is any of the reasons specified in items 4. to 8. above, the notice provisions do not apply.

Finally, the bill requires a manufacturer, wholesaler or importer who cancels, terminates or fails to renew a sales representative agreement to pay the sales representative for all sales made by the sales representative and approved by the manufacturer, wholesaler or importer on or before the effective date of that action as provided in the bill.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB438, s. 1 Section 1. 109.01 (1) of the statutes, as affected by 1997 Wisconsin Act 3, is renumbered 109.01 (1r).

AB438, s. 2 Section 2. 109.01 (1m) of the statutes is created to read:

AB438,5,7 109.01 (1m) "Commission salesperson" means a person, other than an insurance agent or broker, who is paid on the basis of commissions for sales and who is not covered under s. 109.03 (2) or (2g) because the person is an independent contractor rather than an employe.

AB438, s. 3 Section 3. 109.01 (1p) of the statutes is created to read:

AB438,5,14 109.01 (1p) "Commissions earned through the last day of employment" means commissions due a commission salesperson for any sale of goods made by the commission salesperson and approved by the employer on or before the commission salesperson's last day of employment or for any sale of services made by the commission salesperson and delivered to and accepted by the customer on or before the commission salesperson's last day of employment.

AB438, s. 4 Section 4. 109.01 (3) of the statutes is amended to read:

AB438,6,9 109.01 (3) "Wage" or "wages" mean remuneration payable to an employe or commission salesperson for personal services, including salaries, commissions, commissions earned through the last day of employment, holiday and vacation pay, overtime pay, severance pay or dismissal pay, supplemental unemployment compensation benefits when required under a binding collective bargaining agreement, bonuses and any other similar advantages agreed upon between the employer and the employe or commission salesperson or provided by the employer to the employer's employes or commission salespersons as an established policy.

AB438, s. 5 Section 5. 109.01 (4) of the statutes is amended to read:

AB438,6,13 109.01 (4) "Wage deficiency" means the difference between the amount required by law to be paid and the amount actually paid to an employe or commission salesperson.

AB438, s. 6 Section 6. 109.03 (2) of the statutes is amended to read:

AB438,6,21 109.03 (2) (title) Payment to discharged or resigned employes. Any Subject to sub. (4g), any employe, except including a sales agent employed on a commission basis other than an insurance agent, not having a written contract for a definite period, who quits employment or who is discharged from employment shall be paid in full by no later than the date on which the employe regularly would have been paid under the employer's established payroll schedule or the date of payment required under sub. (1), whichever is earlier immediately on the demand of the employe.

AB438, s. 7 Section 7. 109.03 (2g) of the statutes is created to read: