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Dealer Pay Plan Litigation Attorney and Suing Car Dealerships for Wages and Commissions

When can I sue a car dealership for failing to follow my pay plan I signed when I was hired?

Are there dealership lawyers who sue dealerships for employees who have not been paid properly based on the pay plan?

Are there dealership lawyers who have experience in this field?

The Law Office of Jonathan Rudnick LLC litigates cases against car dealerships for violating the agreements with their own employees.

You might ask yourself: Do I need a specific type of attorney or lawyer to sue a car dealership when I think I have not been paid properly. You may need the services of the dealer pay plan litigation attorney or lawyer or someone who is experienced in suing car dealerships for employees when the sales staff is alleging that they have not been properly paid properly according to the pay plan in effect between the salesman and the dealership.

As a dealer pay plan litigation attorney there are numerous items that must be reviewed as part of the litigation including the pay plan, the commission sheets and other information which might be in the possession of a salesperson.

The pay plan attorney who is making a claim against the dealer pertaining to the pay plan litigation regarding properly paid wages must review these documents to determine whether or not the wages have been properly paid consistent with the pay plan.

A pay plan attorney for lawyer has to ask various questions about the method by which the commissions were paid. Usually, the sales staff not provided with complete documentation as to how they were paid.

Automobile dealerships litigating with their employees is becoming more common. There have always been existing employment claims which are well-known to both attorneys and litigants. These claims are discrimination, wrongful termination and the Conscientious Employee Protection Act, also known as CEPA. (whistle-blower lawsuits) These legal theories have been formally entrenched in New Jersey Common Law and New Jersey Statutory Law. Dealership employees, salespersons and management, have the same rights as any other employees under these statutes.

These are not the only claims which employees can pursue against their employers. Claims based in contract, unjust enrichment, fraud, breach of contract and breach of good faith and fair dealings are all viable and real claims against a auto dealership, principal and/or dealership entity.

How do you determine the cost if you are a salesman? How do you determine gross commissionable proceeds as a sales person? This is pay plan litigation and why you need a pay plan litigation lawyer to address the claims while employed by a dealership.

The underlying basis for any claim against the dealer pertaining to the pay plan or a written agreement containing the commission structure is based on dealership cost. There could potentially be several dealership costs. There could be the actual accounting dealership cost. There can be a dealership cost pertaining to the calculation of commissions. There can be the dealership cost pertaining to the calculation of taxes paid to the IRS or the state, such as sales tax and income taxes. It is the very point of the litigation and the claims underlying the litigation pertaining to the pay plan to determine the exact cost upon which the commissions are calculated.

Sometimes there is an overlap and sometimes there is not. Sometimes a fictitious cost gets carried forward and impacts the taxes sometimes it does not. These are the issues which must be dealt with in pay plan and commission litigation. However, the most imperative issue in this litigation is determined which costs go into the calculating of commissions. Are these costs allowed to reduce the commissions based on the pay plan?

Determining acquisition cost on vehicles acquired by the dealership is relatively straightforward. Trade vehicles cost are determined based on appraisal when the dealership takes the vehicle and on trade. Auction vehicles are determined by the amount of money sent to the auction. New vehicle costs are determined based on invoice. However, it gets very tricky when the cost is either increased or decreased by other various items. So, the initial cost needs to be determined then additions to the cost need to be discovered through the litigation process.

The real issue is in the “extra” costs that are added to the acquisition cost of a vehicle that is gong to be sold. Have you ever heard of Lot fee, pack, dent, bruise, glom, service charge, adds, invoice adds, dealer cash or similar term? All of these items can affect commissions to all of the dealership employees These claims are available when a dealership intentionally and willfully (and unintentionally) breaches their employment agreement and/or commission agreement with their employees and sales staff. Legal claims also are present when a dealership miscalculates employee commissions, whether intentional or unintentional. If there is an intentional misstatement of employee commissions, there would be a claim for punitive damages. If you are a dealership employee, you should ask your employer the following questions:

  1. How does the dealership establish the cost of the vehicle?
  2. Can I see proof of the dealership costs by viewing the back screens?
  3. Are there any added costs in addition to pack?
  4. Does the dealership adjust the reserve account without any basis?
  5. Please provide me proof of all charge backs which might reduce the gross commissionable proceeds.
  6. Why is my pay substantially less than what I have already calculated?
  7. Is the dealership refusing to show me key documents?
  8. Is the dealer avoiding my questions about how my pay is calculated?
  9. Why are full retail costs for repairs being added to the vehicle cost which reduces my pay?

The consumer litigation goes something like this: The salesman might have a written agreement with a dealership for a percentage of the profits on the front end of the deal, i.e., selling price over invoice.

This is usually 20%-25%. The issue is how the cost of the car is calculated and EXTRA costs that are added on top of the original cost of the car. These might be called dent, bruise or any number of things, most of which are never disclosed to the salesman. The reason they are not disclosed is because the salesman would get mad if they knew they were paying for damage to lot cars when they know that the dealer has insurance for this or they are fixed at not cost by the dealer or on-site help. The dealer discloses a PACK, which is a disclosed addition to the cost of the car to represent dealer overhead, such as repair costs. This is disclosed and negotiated. The other items are not. It is very difficult to gain access to this information as the dealer will not answer questions or give you the true documentation.

Another non-disclosure is the dealer adding, for no reason, cost to the acquisition of the vehicle, usually the auction price. As an example, the dealer wholesale manager gets a car at Mannheim for $5,000, but when the car is sold by the salesman the dealer calculated the commissions at a cost of $7,500 or so, rather than the $5,000 acquisition cost. This also happens to trade-in vehicles, when the dealer increases the cost of the vehicle to reduce the commissions for the salesman and the finance manager. This is relatively east to track per the auction documents.

  • Does the pay plan have pack built in?
  • Is the pack more than agreed?
  • Are there extra costs in the car cost?
  • Is the dealer increasing the vehicle cost in violation of the pay plan?

The car dealers also do this with the aftermarkets, such as GAP and etch. As an example, the acquisition cost might be $45 but the commission is based on a product price of $100 or higher. THERE IS NO DISCLOSURE AT ALL. What if the dealer principal owns the GAP company or has an interest in the GAP or aftermarket (warranty) company?

In summary, these lawsuits allege dealers are intentionally violating the written pay plans to reduce commissions paid to the employees. This is intensive consumer litigation/employment litigation. Please review your pay plan carefully and determine what the dealer can and cannot charge. Document as best you can the pay and your questions. If you think your employer is violating your written pay plan or you don't have a pay plan and the dealer is acting improperly we provide free, confidential consultations.

You also must figure out how you are going to deal with management or ownership when addressing these issues. You must determine what their reaction is going to be to a claim that you are not being paid properly. What will management do if they feel threatened?

  • What will your job prospects look like management feels threatened?
  • What will job prospects look like if you are fired from the dealership because the challenge management on their pay plan?

You need to keep very detailed records on how your paid is calculated, and commission sheets and if you happen to see something which looks out of the ordinary you need to make a note.

If you happen to see something that reflects a cost different than represented to you and your commission sheet you need to make a note of this item.

Remember there is more to calculating your pay then reading a commission sheet. A commission sheet is a conclusion and not calculation. The commission she only contains a listing of your sales and a listing of the commissions with any splits with other sales persons. Need to make sure that these records are consistent with your records. You need to make sure that you are being paid properly. You need to keep close eye to make sure that the commissions are proper, and the ownership is properly paying you under your pay plan.

The pay plan is the agreement between you and the ownership. Ownership needs to comply with the pay plan.

Jonathan Rudnick Esq is currently litigating class action cases in Illinois, New Jersey and Maryland in a class actions asserting that the dealership on a wide scale basis refused to pay commissions pursuant to the pay plan. Mr. Rudnick has resolved cases in Arkansas and Washington against large franchise dealerships for improper payment of wages and calculation of commissions. I received phone calls from salesman throughout the country for various dealer scams, tricks and improper payment of wages and commissions.