For many years, an oft-litigated question concerned whether a former employee was owed the commissions on sales made prior to the employee’s discharge from employment. Sometimes employment agreements were clear on the issue, such as by providing unambiguously that commissions would be paid when the employer received payment for a completed sale. Frequently, however, employment agreements were less than clear as to when commissions would be paid to former employees. Over the years, courts ruled in different ways and applied different standards when determining whether a former employee was entitled to commissions on sales made prior to an employment termination. On May 20, 2022, in Perthuis v. Baylor Miraca Genetics Laboratories, LLC, the Supreme Court of Texas clarified the standard to be applied in those situations.
Thomas Brandon Perthuis was vice president of sales and marketing for Baylor Miraca Genetics Laboratories. In early 2015, the company drafted, and Perthuis signed without alteration, a two-page employment agreement that provided the following: “Your commission will be 3.5% of your net sales.” The agreement contained no other explanation concerning the commission arrangement. In January 2017, Perthuis completed negotiations on an amendment to a sales contract with a prominent client, making the contract the largest of its kind in the company’s history. The company terminated Perthuis’s employment on January 23, 2017. The next day, the client signed...
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