Ambiguity in Commission Plan Results in Additional Commissions to Former Employee

Norton v. Atlantic Chrysler, 2009 WL 1258100 (App. Div., May 8, 2009) – The plaintiff was terminated from his position as a service manager on September 20, 2007, and thereafter filed a wage collection claim seeking commissions earned during his last month of employment. The company’s pay plan provided for commissions at 4.5% of service gross profit, and further provided the “employee MUST work the full month to be entitled to the bonus for that month.” Because the agreement used both the term “commission” and “bonus,” the court found that the agreement was ambiguous, justifying the admission of extrinsic evidence to determine its meaning.

The employee testified there were no conditions on his commissions, and that the “bonus” referred to was a separate bonus apart from his 4.5% commissions. The plaintiff’s supervisor testified that the employer used the terms “commission” and “bonus” interchangeably. The Appellate Division deferred to the plaintiff’s testimony because the supervisor was hired after the plaintiff’s pay plan was already executed, and therefore was not in a position to know the parties’ intention at the time. The plaintiff was therefore awarded the pro rata portion of his commission corresponding to the number of days he worked in the last month of his employment.

Note: This article was published in the June 2009 issue of the New Jersey eAuthority.