A class action complaint was filed in U.S. District Court in San Francisco against Oracle America, Inc. (“Oracle”) by a former Oracle sales representative, alleging that Oracle retroactively changed its commission contacts in order to avoid paying its sales employees millions in earned commissions.

Oracle’s Retroactive Compensation Plans

The class action complaint alleges that Oracle would alter its sales employees’ existing compensation plans with revised plans known as “re-plans.” Re-plans are retroactive and apply to sales transactions that have already been completed by sales employees. According to the complaint, “Re-plans affect past sales going back to a date of Oracle’s choosing, sometimes to the beginning of the same fiscal year and sometimes to a date in a previous fiscal year.”

The complaint further alleges:

. . . Oracle has . . . systematically stiffed its salesforce 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. 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.

. . .Oracle coerces employees into accepting re-plans by threatening that if they fail to accept the new commission plans within 24 hours, they will not be paid pending commissions at all. Even if a a bold employee refuses to agree to an inferior replan, Oracle barrels ahead anyway, applying the re-plan terms to both past and future sales.

Why Do Oracle’s Retroactive Changes Matter?

According to the complaint:

Oracle’s commission policies and practices violate the contractual compensation plans accepted by sales employees. They violate the California Labor Code’s prohibitions on deducting wages to defray ordinary business costs and secretly paying a lower wage while purporting to pay the wage designated by contract. They contradict the Labor Code requirement that commission contracts be transparent about the methods for computing and paying commissions. They are fundamentally unfair business practices.

Further, the lawsuit alleges that Oracle’s “re-plans” allow Oracle to “claw back” previously paid commissions, in addition to forcing employees who cannot afford to “fork over substantial sums,” to either “. . . pay off the supposed debt by continuing to work for Oracle without being paid commission or be threatened with a collections lawsuit if they leave before completely paying off their negative commission balance.”

Moreover, the lawsuit contends that “. . . Oracle reduces commissions through systematic processes designed to align commissions with financial forecasts and bottom line goals. Over the years, Oracle has taken millions of dollars from commission wages to add to its bottom line.”

Who May Have Been Affected?

The complaint filed in California applies to commissioned sales employees employed by Oracle in California for the last four years who received “. . . revised commission agreements which retroactively applied inferior – i.e. less remunerative – numeric terms (including but not limited to higher quotas and lower commission rates) to completed sales.”

What Can Those Who May Have Been Affected Do?

The Kehoe Law Firm P.C. is ready to help.  If you served as an Oracle commissioned sales employee to whom Oracle issued revised commission agreements which retroactively applied less lucrative terms, you can speak to an attorney for a free, no-obligation consultation by calling Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected] or John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected].

Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, false claims, deception or data breaches.  Together, the partners of the Kehoe Law Firm, P.C. have spent more than 30 years prosecuting precedent-setting securities and financial fraud cases in federal and state courts on behalf of institutional and individual clients.