Updated A new lawsuit filed by a former Oracle employee alleges the software giant “has systematically stiffed its sales force of earned commission wages for many years, by scrapping contractual compensation plans when they yield commission earnings that are higher than Oracle would prefer to pay and retroactively imposing inferior – i.e. less remunerative – numeric terms.”
Oracle denies the allegations.
Claimant Marcella Johnson, an Oracle employee during 2013 and 2014, goes on to claim that when Big Red offers its sales representatives a new compensation plan, they're given 24 hours to either accept it or forego earned-but-as-yet-unpaid commissions. The filing also claims that Oracle's changes mean that retrospective changes to commissions sometimes see employees deemed to have been over-paid. Those workers are then deemed to have a “negative commission” debt to Oracle, which is recovered by not paying new commissions. If an employee considers leaving, the filing says Oracle points out it can recover the debt in court.
Johnson found herself with US$20,000 of such debt to Oracle and the filing says could not afford to repay it. “As a result, Plaintiff felt she had no choice but to continue working for Oracle for months without being paid any commissions. The new commissions she earned were levied by Oracle to offset the 'negative commission balance' resulting from retroactive imposition of the inferior commission rate.”
The suit (PDF filing here) also alleges that Oracle does all this knowingly, in order “to align commissions with financial forecasts and bottom line goals.”
The filing concedes that Oracle workers sign up for this: their contracts state that Oracle can change compensation plans at its pleasure. But the suit argues the practice tips over into illegal territory by violating several sections of the California Labor Code, especially Sections 221, 223 and 2751.
On the issue of forcing workers to repay commissions, the suit thinks Oracle's on the wrong side of Section 221's provision that “It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.”
Section 223, the filing argues, has been contravened because it says “ it shall be unlawful to secretly pay a lower wage while purporting to pay the wage designated by statute or by contract.” Section 2751 explains that a contract is a contract and must be shown in writing to an employee, with the imputation being that Oracle can't just change its comp plans without also presenting a new contract.
Big Red's Deborah Hellinger told The Register: "Oracle categorically denies the allegations and we will vigorously defend against them." Which means more court action - yay!
This is not the first such suit Oracle has faced in recent times. In January 2017 we learned of a dispute with a sales person who felt she'd unfairly missed out on commissions. ®