A former Oracle America Inc. salesperson sued the business software giant in federal court in San Francisco Tuesday, alleging that it illegally reduces employees’ sales commissions retroactively.
The lawsuit by Marcella Johnson of Modesto claims that “Oracle has systematically stiffed its salesforce of earned commission wages for many years.”
The lawsuit alleges:
“Simply put…Oracle routinely decides to change commission formulas so as to reduce commission payments on past sales, well after the commissions have been earned and even sometimes after they have been paid.”
The alleged policy violates California’s labor code and unfair business practices law, the lawsuit contends.
Johnson asks the court to certify the lawsuit as a class action on behalf of all Oracle commission-sales employees since 2013. The suit seeks $150 million in financial damages.
Redwood Shores-based Oracle said in a statement:
“Oracle categorically denies the allegations and we will vigorously defend against them.”
The lawsuit says Oracle gives each salesperson a contract setting forth commission rates and sales targets or quotas. The contracts also contain a clause allowing the company to change commission terms unilaterally and retroactively, according to the lawsuit.
The commissions are a substantial part of a salesperson’s wages, the lawsuit says.
The suit claims that if a retroactively reduced commission has already been paid, Oracle “claws back” the alleged overpayment by requiring the employee to work for a time without commissions or to repay the company after leaving the job.
It charges the alleged practice violates state labor law provisions prohibiting employers from collecting wages already paid and from secretly paying a lower wage than the one indicated in a contract.
Johnson says in the lawsuit that she worked for Oracle selling human resources and personnel management software from March 2013 until she resigned in July 2014.
She was paid commission fees specified in her contract in November and December 2013. But subsequently, according to the lawsuit, she was given a reduced commission rate made retroactively effective as of June 2013.
As a result, the lawsuit says, “plaintiff suddenly had a negative commission balance of approximately $20,000,” and had to work without commissions until July 2014 to repay the amount.