IBM Sales Commission Lawsuit
International Business Machines (IBM) is being accused of using “bait and switch” tactics to underpay its sales representatives. Current and past employees of IBM may be entitled to significant compensation if they were denied their rightfully earned commissions. Milberg attorneys have settled lawsuits on behalf of IBM salespeople who sued the company for allegedly reducing their commission payments. We also won a jury verdict against IBM on behalf of a former manager who was terminated after reporting racial bias in connection with unpaid commissions.
Contact Milberg for a free confidential consultation of your IBM commission lawsuit.
Lawsuits Accuse IBM of Lowering Commissions
IBM tells its sales representatives that their income is limited only by how much they are able to sell. But according to people who actually sold products and services for IBM, this isn’t the truth. In fact, they claim in lawsuits that IBM intentionally misleads sales reps about its “uncapped commissions” program, incentivizing them to pursue big deals and then capping commissions when a deal is reached.
David Swafford v. International Business Machines Corporation
Lawsuits filed in states that include California, Georgia, and North Carolina say that that IBM unlawfully capped sales commissions after promising the sales team that they would be uncapped.
“IBM promised them payment for their hard work, and then changed the rules after the fact, instead penalizing the most productive sales employees for going above and beyond their sales quotas.”
David Swafford, an IBM sales representative since 2009, filed a lawsuit against IBM in 2018 in United States District Court in San Francisco. According to Swafford’s lawsuit, the company unequivocally told salespeople that commissions were uncapped. After he closed two large deals for IBM in 2016, Swafford was owed a commission of nearly $1 million. However, he was paid only a portion of those commissions. At the time his lawsuit was filed, he was still owed approximately $250,000 in commissions that were arbitrarily capped by IBM.
IBM “Changed The Rules After The Fact”
Swafford’s case claimed that IBM committed fraud and violated California Labor Code. It settled confidentially in November 2019.
Matthew E. Lee, a partner at Milberg, said that workers like Swafford spent years boosting IBM’s bottom line, only to not be paid the commissions they were owed. “IBM promised them payment for their hard work, and then changed the rules after the fact, instead penalizing the most productive sales employees for going above and beyond their sales quotas,” said Lee in a press release.
Choplin v. IBM
Lee also settled a case on behalf of Bobby Choplin, who was paid $296,568 less than he was due to earn from commissions. IBM agreed to settle after a judge denied its attempt to have the case tossed out of a North Carolina district court.
IBM Claims Salespeople Do Not Have Enforceable Contract
IBM has relied on a legal loophole to avoid the payment of commissions. It provides salespeople with a document called an Incentive Plan Letter (IPL), which it says is not an enforceable contract. Without a valid contract, IBM contends that it can cap payments however it wants. While this bait and switch tactic has avoided legal consequences for years, the tide has started to turn against IBM.
IBM Has Held Back Tens of Million in Commissions
Plaintiffs contend that IBM uses this strategy to recruit in a highly competitive field. Were IBM to actually say upfront that commissions could be capped, it would hurt its efforts to attract good sales representatives. As a result, IBM engages in a practice whereby it tells its salespeople that their commissions will not be capped, both verbally and in written documents, and then it caps certain high-achievers after the fact. During a deposition, IBM’s finance manager said that the company held back a combined $43.4 million in prospective commissions in 2013, 2014, and 2015, reports the News & Observer.
IBM’s Pattern of Mistreating Workers
Over that last fifteen years, around two dozen salespeople have sued Big Blue for failing to pay promised commissions. Earlier this year, the company settled a lawsuit filed by Jerome Beard, a sales executive who said he was denied $2.4 million in commissions due to fraud and racial bias. Milberg’s Lee represented Beard. Big Blue is additionally facing a class action lawsuit related to age discrimination charges.
A former salesman described IBM as “a law firm that happens to owe an IT company.”
A former IBM salesman who says he was laid off due to his age said IBM is a difficult opponent in court, calling them “a law firm that happens to own an IT company.” They’ve got lawyers everywhere,” he told the News & Observer.
Milberg Wins IBM Wrongful Termination Case
In April 2021, Milberg won an $11.1 million verdict on behalf of client Scott Kingston, who worked as an IBM sales manager for 17 years. Kingston claimed the company wrongfully terminated him after he raised claims of racial bias against a black salesman, Jerome Beard, who had his commissions slashed. Kingston also alleged that he was not paid all commissions owed to him by IBM in the first quarter of 2018.
A Washington State jury awarded Kingston $1.9 million in past economic losses, $3.1 million in future economic losses, $113,000 in unpaid sales commissions, and $6 million in emotional distress damages.
“We are proud of our client for standing up for what’s right,” said Milberg Attorney Matthew E. Lee. “He deserved justice and, after three long years, this verdict has given him that.”
Free IBM Unpaid Commission Lawsuit Review
To succeed against IBM, you need a law firm with a proven track record of taking on the world’s largest and wealthiest corporations. Milberg attorneys have scored major lawsuit victories against IBM. If your commissions were capped and you’re owed money, contact Milberg for a free legal consultation.