Expert: Shirley McAllister, CPP, PHR - 10/20/2009

Question
I work for a large department store in the cosmetics department.  For years now we have been paid 2.77% commission on the products we sell in our department. Our employee hand book lists our commission as 2.77% (3.00%)..I always wondered why we were told 3% when we were hired, but it is actually 2.77%..So I started investigating. I had heard that years ago our company said we were self employed and the difference of .23% was our self employment tax...I went to the IRS and spoke with a woman there who said my company was told along time ago that we are not self employed...I have never received a 1099 in all the years I have been employed...My cosmetic company pays 100% of my commission, which is given to my store and they include it in my paycheck...I heard years ago when the self emp tax was confusing for the employees the store said they would keep track of it and so the cosmetic co. paid the store the whole 3% and they would take care of passing along the tax...Well I went to my HR person and my department manager, I told them what I had found out from the IRS, and asked for an explaination..They said they would find out and get back to me...A week or 2 later I was called into their office, and they said "your commission is 2.77%", they kept repeating it, and that is all they would tell me...I said to the department manager, when you hire in the future you had better tell them the commission is 2.77%, not the 3% we were all told..(even though we could see that we only get 2.77% on our checks)...the next week there was a new employee handbook given out that said cosmetics commission is 2.77%, no mention of the 3%....I want to ask the individual cosmetic lines what they actually pay the store...but How do I get to them? I am sure they are paying the full 3%....This is huge, is a class action suit the answer? there are thousands of us all around the country that work for this store...Help...

Answer
If you have an old employee handbook or some type of proof that you were told you would be paid 3% and are only being paid 2.77% than yes you could file suit. If others will go with you and also testify that they were told 3% even without proof you could file a class action suit. If you win you will be paid the difference between the 2.77% and the 3% for all the years you have worked for the company as well as all the other employees that file suit with you.

Many lawyers will take these types of suits on contingency which means they get paid a percentage of your settlement and you do not have to pay them until then and if you do not get a settlement they do not get paid.

Many lawyers also will give you one free consultation.

It would be much easier if more than one of you went in together.

You could also file a claim with the Department of labor, but it takes a long time for them to investigate as they are backlogged right now with cases.

Shirley