Oracle Settles Commission Lawsuit for $15.5 Million

Void for vagueness

According to the complaint, Oracle failed to provide commissioned sales employees with a written, signed commission contract at the beginning of their employment. The contracts that were later provided failed to set forth the method by which commissions would be computed and paid.

Maryam Abrishamcar, for example, began to work as a commissioned salesperson in November 2014. She did not receive a contract until January 2015 – three months after she started work. It wasn’t signed.

Even then, she alleges, the purported contract failed to set forth the method by which her commission would be computed and paid. It also provided that Oracle possessed unilateral discretion to “retroactively reduce commission payments and deviate from, modify, cancel and/or replace any term of a commission contract (disclosed or otherwise).” Oracle also reserved the power to “unilaterally and retroactively determine the amount of commissions paid to be any amount (or no amount at all) and to change commission rates based on any subjective disclosed or undisclosed grounds.”

Abrishamcar believed that Oracle made subjective, undisclosed, retroactive changes to employees’ commission agreements during their employment. She alleges that this was done to shift the cost of doing business away from the tech behemoth itself and onto the shoulders of workers.

Question #1: How could any commissioned salesperson possibly know if, when, or how much she might be paid?

Answer #1: If a contract lacks specific terms, it can’t be legally enforced. It is not a valid contract, or to use the legal term, it’s “void for vagueness”. 

Question #2: Why should Maryam Abrishamcar finance Oracle’s business?

Answer #2: Good question.

If you talk, we’ll fire you

As a condition of their employment, Oracle allegedly required all employees to keep the terms of their employment secret. This included working conditions and the details of incentive compensation. Abrishamcar was allegedly reminded, several times, that she could be fired if she violated this confidentiality requirement.

The California Labor Code protects workers against employer abuse

The lawsuit covers a lot of ground, but here are the top lines:

Section 2751 of the California Labor Code provides that:
“(a) Whenever an employer enters into a contract of employment with an employee for services to be rendered within this state and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid.

(b) The employer shall give a signed copy of the contract to every employee who is a party thereto and shall obtain a signed receipt for the contract from each employee. In the case of a contract that expires and where the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.”

Section 232.5 of the California Labor Code prohibits employers from preventing employees from disclosing information about working conditions. Specifically, it prevents employers from requiring employees to refrain from disclosing information about working conditions, requiring waivers that deny the right to disclose, or retaliating against employees who do disclose such information.

PAGA remedies

Abrishamcar sought remedies under PAGA, which some may see as an interesting choice because it provides only limited financial benefits to the 5,000 Oracle employees who were reportedly injured by Oracle’s abusive practices.

PAGA allows employees to sue for California Labor Code violations not just on their own behalf, but also on behalf of other “aggrieved employees” and the State of California. Unlike class action lawsuits, PAGA lawsuits are representative actions, meaning employees bring claims on behalf of themselves, other employees, and the State of California.

Most of the benefits, including penalties assessed on the employer, redound to the benefit of the Division of Labor Standards Enforcement. In the long run, this benefits workers who are the “eyes and ears” on the ground and more likely to be aware of labor law infractions. It is probably reasonable to view PAGA lawsuits as public interest actions, rather than actions designed to redress the individual harms that plaintiffs have suffered. PAGA claims have become a powerful tool for workers to seek justice and deter employer misconduct.

Under the circumstances alleged in the complaint, Oracle’s decision to settle the lawsuit may have seemed like the best choice. Why it took so long, given the protections of California labor law, is another question.