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  1. #1

    Default Sales Representative Working Without a Contract, Being Forced to Sign a Bad One

    My question involves business law in the state of: California

    I have been working without a contract. I'm a sales rep for a computer services company. I answered a craigslist ad in Nevada. Went to training in Colorado. Came back home and started selling in Nevada. My situation changed and I had to move to California. The company was OK with the move since they didn't have a rep in the region.

    When I went to California, they changed my commission structure (it got smaller). It wasn't much, and I didn't have much of a choice.

    I've been working for 5 months in California. Since the commission change, I've been pushing to get a written agreement signed whenever it didn't seem like it would cause a problem. Now, they've finally given me a written agreement.

    I reviewed it and they changed my commission structure again. It also says they won't give me my monthly stipend and they won't cover expenses (they've been reimbursing me for taking people out to lunch and a few times I've had to fly to northern california for customers and they paid for planes/hotel/food).

    It also says that I have to submit jurisdiction to Colorado for any disputes, and gives me a FIVE year non-compete.

    I looked up the law about this as much as google would allow. Apparently, California doesn't allow non-competes, and California has a set of requirements for sales representative agreements that this company doesn't follow. ( http://www.leginfo.ca.gov/cgi-bin/di...738.10-1738.17 ) It doesn't meet most of the requirements listed in 1738.13, and 1738.14 looks like California has jurisdiction and I can't waive that.

    I brought these issues up and told them I want an agreement that meets the law. They responded by telling me I have three days to sign the agreement they gave me or I'm fired.

    I'm an independent contractor, but they pay my expenses, review my work progress daily, and come out to attend sales meetings with me. Lately they've been pushing to meet with customers privately - which is a problem for me because I don't know what promises they are making behind closed doors.

    I have three really big deals coming to a head right now that will mean commission checks that are bigger than all the money I've made so far. I feel like they are doing this to try to fire me before these deals close and they have to pay me big commissions.

    I have other problems with them. They are constantly late with paying me and the sales director has gotten verbally abusive - yelling at me and insulting me out of nowhere one day, and praising me for my good work the next.

    I don't want to sign this thing, but I feel like I have no choice. I'm worried that I'll cave and sign it and they'll still fire me to avoid paying me.

    Do I have to sign this contract? Do I have any recourse? What happens if they fire me before my customer pays on the big deals?

  2. #2
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    Default Re: Sales Representative Working Without a Contract, Being Forced to Sign a Bad One

    They don't need your refusal to sign the contract as an excuse to fire you - they can simply tell you that they no longer require your services. Unless the contract guarantees that your services will be utilized over a contractual period of time, it also doesn't prevent them from firing you after you sign it.

    They also don't need your permission to alter the commission structure. They can simply tell you that as of a specified date the new structure applies. If your concern is accurate, I expect that they are less concerned with the changed commission structure and much more concerned with getting you to sign the non-compete - they can't unilaterally impose such a contractual provision upon you.

    Five years is a very long time for a non-compete agreement - geographic scope also contracts into reasonableness, and you've not mentioned if the proposed restriction is local, regional, national, or even unlimited; also, the extent to which the agreement is narrowly tailored could affect enforceability, and both the state in which enforcement is sought and the nature of the work could affect whether it is enforceable in part even if a court rules other parts to be unenforceable. Their noncompliance with Civil Code Sec. 1738.10, et seq, presents an interesting wrinkle. I suspect that you'll have difficulty proving a case under Civ. Code Sec. 1738.15 (treble damages) as you're presently in negotiations over the terms of a written contract, but those laws create jurisdiction in California, allow for recovery of attorney fees, and jurisdiction cannot be waived. See Civ. Code Sec. 1738.13(e) - so they can't use the choice of law clause (assuming you sign) to force that issue to be litigated in Colorado.

    Is that provision relating to Colorado merely a choice of venue clause, or is it also a choice of law clause? In simple terms, the former says "Litigation will occur in X County, Colorado"; the latter says, "Disputes under this contract will be decided under Colorado law." California courts will enforce a contractual choice of law clause if there is a substantial relationship between parties or their transaction to the designated state, or if it finds another reasonable basis for the parties' choice of law, unless the chosen state's law is contrary to the fundamental public policy of California. Also, things could get a bit tricky if you take work in California for a company based in a different state.

    Also, you have told us that you are an independent contractor, not an employee, so this contract is technically business-to-business. That's not going to directly affect you in California due to the breadth of B&P Code Sec. 16600, but it could affect how the case is analyzed in other states.

    You're sensing that this can get quite complicated, rather quickly?

    It's difficult to know what the best suggestion would be, as we have little information about the company, field of trade, or dollar figures involved, but one approach might be to try to stall while you earn the forthcoming commissions, while simultaneously seeking other employment. That way, if necessary, you could attempt to enforce the existing commission structure (which, from what I understand, isn't changed until after the contract is signed) on those transactions, while working toward getting employment or a contract with a healthier company with no non-compete that might concern an out-of-state client or employer.

  3. #3

    Default Re: Sales Representative Working Without a Contract, Being Forced to Sign a Bad One

    Thanks.

    The non-compete had no specifications about a fixed area or region.

    Litigation will be specified in X AND decided under Colorado Law were specified.

    I was obviously not keen on signing this. I told them I wouldn't agree, and I wanted an agreement under California law. They fired me in response.

    I guess Karma was looking down on me. My biggest customer called me and I told them what happened. He asked me to come in. I did, showed the emails on my phone, and they thanked me and told me they won't be sending any business to the company. I was competing with two other companies, one who had no rep in the area. The customer put me on the phone with them right then and there. They have already sent me a contract, and that contract is perfectly reasonable and follows the law I mentioned to the letter.

    They are excited to have me and I have a good chance of closing this deal quickly. I know all about the services of the new company because I took the time to research them so I can get to work right away.

    I did also set up a free consultation appointment with an attorney. If he finds any sort of action, I will take it. I'm also going to complain to every relevant agency I can find - from the Secretary of State to the employment/labor board, to the attorney general. This worked out for me magically, but I don't want the next person to go through what I went through. If this particular customer didn't save my butt, I would really be in a bad situation right now.

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