170 F. Supp. 3d 1162
N.D. Ill.2016Background
- Plaintiffs (Cohan from New York; Schardt from California) were outside sales reps in Medline’s Advanced Wound Care division paid commissions tied to year‑over‑year sales growth; compensation plans and monthly reports showed positive and negative growth by account/item.
- Medline calculated commissions by subtracting prior‑year sales from current‑year sales for each product/account (yielding positive or negative growth), applied commission percentages, and summed positives and negatives to a "Total Commission."
- Plaintiffs claimed Medline illegally deducted negative account growth from commissions (arguing commissions should be paid only on positive growth) and brought claims under the Illinois Wage Payment and Collection Act (IWPCA) and comparable New York and California laws.
- Plaintiffs attended periodic multi‑day meetings in Illinois each year (training/promotions); they did not perform regular sales work in Illinois and otherwise worked in their home states.
- Medline provided monthly commission detail reports and managers repeatedly told Plaintiffs the negatives were part of the pay plan; Plaintiffs continued working for years after learning how calculations were made.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IWPCA applies given Plaintiffs’ limited work in Illinois | IWPCA governs because choice‑of‑law and limited in‑state work suffice | IWPCA does not apply unless Plaintiffs performed sufficient work in Illinois under the Act’s territorial scope | Court: IWPCA does not apply — Plaintiffs’ brief, infrequent training visits are insufficient to make them "employees in [Illinois]" under the Act |
| Whether choice‑of‑law clause imports IWPCA extraterritorially | Choice‑of‑law makes IWPCA applicable regardless of territorial limits | Choice‑of‑law cannot expand statutory territorial reach; Act only applies if its terms otherwise cover the claim | Court: Choice‑of‑law does not override statutory territorial limits; prior opinion rejecting that argument is law of the case |
| Whether Medline’s commission calculation violated IWPCA (or state wage laws) by deducting negative account growth | Plaintiffs: commissions were "earned" before reductions; deducting declines illegally reduces earned wages | Medline: parties agreed commissions are computed net of declines; negatives are part of the commission calculation and not unlawful deductions | Court: No violation — no agreement that negatives would be disregarded; reports and communications show implied assent and commissions are not "earned" until net calculation completed |
| Applicability of New York and California law to prohibit the deductions | Plaintiffs: state statutes protect earned commissions from post‑earning deductions | Medline: under NY/CA law, when commissions are earned depends on agreement; deductions are lawful if part of agreed calculation | Court: NY and CA claims fail for same reasons — the parties agreed (expressly or by course of dealing) that netting declines was part of earning formula |
Key Cases Cited
- Glass v. Kemper Corp., 133 F.3d 999 (7th Cir. 1998) (IWPCA lacks extraterritorial reach; protects employees in Illinois)
- Adams v. Catrambone, 359 F.3d 858 (7th Cir. 2004) (IWPCA may apply to nonresidents who perform most work in Illinois)
- Cromeens, Holloman, Sibert, Inc. v. AB Volvo, 349 F.3d 376 (7th Cir. 2003) (apply chosen state law while respecting statute’s scope)
- Pachter v. Bernard Hodes Group, Inc., 10 N.Y.3d 609 (N.Y. 2008) (commissions are earned per agreement; employer may require downward adjustments if employee knew and acquiesced)
- Koehl v. Verio, Inc., 142 Cal.App.4th 1313 (Cal. Ct. App. 2006) (commission entitlement depends on contract; chargebacks or later adjustments lawful when part of agreed plan)
- Hess v. Kanoski & Assocs., 668 F.3d 446 (7th Cir. 2012) (IWPCA claim requires an agreement entitling the employee to the claimed payments)