Promoting training pay commission draws for new employees that are not intended to be paid?

Question

I have a friend and they got a job a few weeks ago. The job is 100% commission, but there is a $15 per hour training pay for 6 weeks in the form of a draw against future commissions.

Two weeks in, management forgot to pay the first check, then called and got very squirrely about the pay. The manager told my friend, "X salesperson only took one draw", expecting my friend to do the same. It was a subtle warning, but was played off without denying it would actually be paid, and they did say they would pay the first, but it seemed to be implied that my friend really should not try to go the full 6 weeks on the training pay.

The implication was as though they really did not want to pay the draw in the first place. After all, it's a 100% commission position, and the company is set up so that they don't really have to pay it in the long run since it is only a "draw" that will be taken out of future commissions.

What is more disconcerting is that my friend then received an email the next day asking them to sign a document which is revised to include clauses like "there is no guarantee of the draws" and "commission is not guaranteed". Here is the exact wording:

Compensation is all commission based and no certain payout is guaranteed
...
If you are receiving draws, you are not guaranteed a draw. Should your employment be terminated (either voluntarily or involuntarily) prior to the end of a pay period, you will forfeit all draws.
...
Should your employment be terminated (either voluntarily or involuntarily), you will forfeit all pre-commissions and commissions for jobs that are not completed and paid in full at the time of termination.

On the other hand, the original document had said this:

We will provide $15/hr in training pay, per pay period, as a draw against
your commission, for a maximum of 6 weeks. It will be paid back from your commission, from no more than 50% of your commission, until paid back
in full. If your employment should be terminated prior to paying back the draws, you will receive a 1099 as nonemployee compensation with no
withholdings applied.

These are red flags, because in the offer letter it said explicitly, "you will receive training pay for a maximum of 6 weeks of $15 per hour" and there was nothing about commission "not being guaranteed".

However, the job does seem to be a good job because the owner is really friendly and seems to be a good person. They also talk about how they never don't pay their employees, and that the first check was due to admin error for the new employee and was issued to be picked up on Monday.

But for all the talk about never not paying employees, these this are concerning.

How should I advise my friend in this situation? Should they sign the document? It seems like this company is promising training pay, but not really. Is that ethical? Is it legal? Is it normal or odd? What would you do?

Do you think companies should be promising 6 weeks of training pay when a couple weeks in they will pressure the new employee not to take any more draws?

Answer 1

However, the job does seem to be a good job because the owner is really friendly and seems to be a good person.

No, that's not the sign of a good job. That's the sign of a good salesman.

I think your friend shouldn't sign anything and should look for another job. Anything else would be better than this.

He should also contact the Department of Labor for his State and ask for advice. Most likely, they'll recover his back wages for him.

They promised him pay during the training. They're not paying him. He can no longer continue to train because he's not getting paid. And without completing the training, he can't earn his commission.

It's not his fault his employer isn't following through and is trying to alter the terms of the contract midway through.

As a rule of thumb, he should stay away from employers that only pay sales commission and not even a base salary.

He should also stay away from any employer that suddenly wants to adversely alter the original contract after 2 weeks of training. If he signs that piece of paper. It will progressively get worse over time. Two weeks later, his employer might demand that he starts buying his own inventory. Two weeks after that, it will be the commission percentage that will be revised down.

Trust me on this one. I've seen it before. It's just the beginning. The owner most likely has excellent charisma and probably promised him the world, but this is starting to look like a predatory business.

Answer 2

What is more disconcerting is that my friend then received an email the next day asking them to sign a document which is revised to include clauses like "there is no guarantee of the draws" and "commission is not guaranteed".

So your friend is on 100% commission pay, but (according to this revised document) the commission isn't guaranteed - and while during training he's on $15 an hour, but that isn't guaranteed either? That sounds dodgy as anything to me.

If it were me, I'd refuse to sign this document (as it seems to waive all rights to any reasonable level of compensation at all) and then look elsewhere.

However, the job does seem to be a good job because the owner is really friendly and seems to be a good person.

Lots of owners / bosses / conmen seem like great, friendly people, then reality hits when they refuse to pay their staff.