A group of salespeople is suing
Johnson Controls in an effort to recoup payment they allege is being withheld following the company’s implementation of a new incentive plan.
A class action lawsuit was filed on behalf of the group of Johnson Controls employees in U.S. District Court for the Eastern District of Wisconsin last week. The company is technically based in Ireland, but has its operational headquarters in Glendale.
The complaint alleges the new incentive plan put in place by the company “robs the named plaintiffs of millions of dollars of incentives and commissions that Johnson Controls had previously agreed to pay them for contract that the plaintiffs procured and closed.”
The amount in controversy exceeds $5 million, court documents show.
For the last several decades, Johnson Controls has paid incentives to its salespeople at regular intervals throughout the course of a project or contract. Under the previous system, salespeople would receive an initial commission payment of between 20% to 25% of the overall commission shortly after closing a contract. Over the life of a project, the company would then pay the remaining 75% to 80% of the commission. The portion of the remaining commission is typically referred to as a backlog.
Some employees’ backlogs ranged in size from a little more than $1,000 to more than $176,000, according to the complaint.
Under the previous payment system, if a contract called for customer payments to be made over the course of multiple fiscal years, Johnson Controls agreed to pay salespeople their incentives at the time the contract was closed. The company referred to this as a grandfathering provision.
"With this grandfathering provision, the plaintiffs had some assurance that Johnson Controls would abide by the terms of its incentive agreement," reads the complaint.
Last November, the company allegedly announced that the grandfather provision would be removed, even though the company was going to continue servicing the contracts and projects under which “billions of dollars in backlogs were due,” the complaint says.
The new payment plan shifts to a system where commission is earned and paid out at the time a project is booked, instead of over time as the project is paid, according to the complaint. All sales, including those made prior to the adoption of this new plan, will still be governed by these new rules.
After learning of the new system, several salespeople allegedly attempted to save data related to their pre-existing backlogs.
“Within a day or two of the announced change, however, they discovered that all information about their backlogs that had previously been in their employee portals had been wiped out and was no longer available,” according to the complaint.
The affected employees seek damages in an amount to be determined at trial, an order providing them the commissions they’re still owed and further relief determined to be proper by the court.
"The success of our organization is directly tied to the success of our people, and we routinely assess our practices to best support their growth and achievements," said Johnson Controls in a statement. "We modified our sales incentive program to better align with our company strategy to deliver smart, healthy and more sustainable environments for our customers. We will continue to assist our sales organization to ensure a seamless transition to our revised competitive model."
