Salesperson Litigation and Dealer Pay Plan claims against dealerships

Car salesman getting ripped off by dealerships!

Pay Plan litigation against dealerships!


If you work in sales at the dealership you know the daily grind of selling cars, then having the finance manager skim your profits out of the deal into the back end, making your commission vanish. How about the mysterious appearance of repair orders or dealer costs that further nickel and dime you into the flat fee on each transaction? You do not have to take it anymore. They cannot take more pack than is permitted in the pay plan. Does the reserve feel a little light? Does the dealership refuse to document the reserve? Does the dealership refuse to provide paperwork? Have you seen or do you have access to the back screens? Do they answer your questions?

How about chargebacks? Does this number seem too high? THIS IS COSTING YOU A LOT OF MONEY!!! Is there a percentage on the transaction for advertising or "overhead"?

You have a written pay plan and the dealer has to honor the wording and the spirit of the agreement. They cannot reduce the commissions by unspecified overhead; that's why they have a pack. Get the pay plan and make them comply with their own written words.

When a salesman or dealership employee sues the dealership it is a very interesting case. The salesman or the dealership employee works on commission is attempting to demonstrate that the basis for the calculation of commissions is improper or wrong.

What do I mean by that?

These cases involving demonstrating and proving that the management personnel at the dealership were improperly calculating the commission using various deceptive and fraudulent methods.

One method can be adding costs to vehicles

One method could be placed in miscalculation of commissions

One method could be penalizing employees for improper conduct

One method could be improperly applying the purchase of various equipment to the sale of automobiles

One method could be that the dealership is pocketing spiffs or incentives from the manufacturers or third-party vendors

I have seen all types of improper dealership tactics to reduce the commissions payable to the sales staff. Usually the dealership takes the position where the mental state of management is that anybody could sell these cars and the salesmen are being paid too much. In a few cases I have seen the dealership added various costs to vehicles obtained from auction claiming that why should the salesman participate in such a good deal.

In New Jersey the New Jersey Consumer Fraud Act would likely not apply to this type of relationship. There are some cases which address the New Jersey Consumer Fraud Act in the context of the employer employee relationship. These cases suggest if not outright state that there are no Consumer Fraud Act claims. However, there are various other claims available to salesman including breach of contract and fraud. Fraud is one of the longest standing claims that exist the common law. In some states there are actually statutes that exist to prohibit and penalize employers from miscalculating and withholding wages improperly.

New Jersey has a board of wage and labor that can potentially address these claims where they can be litigated for little or no cost to the salesperson. Their various limitations to this type of claim.

The Law Office of Jonathan Rudnick LLC litigates pay plan issues for salespersons.