Lack of key paragraph costs Texas employer $749,906!

I am sometimes asked what lawyers really do for a living? My answer—to hope for the best, plan for the worst. The worst was definitely not planned for in a recent case from Harris County.

Two-page employment agreement

Thomas Patlovany started work for Five Star Electric Motors in August 2012. The company sold products for Siemens. A customer paid Siemens for the product and, in turn, Siemens paid part of the sales price to Five Star. From that amount, Five Star paid a commission to the salesperson responsible for the sale. A virtuous circle of commerce.

Here is a summary of the agreement between Five Star and Patlovany:

You are an at-will employee. Compensation for you will be a base salary of $160,000 per year. Total annual compensation will be the greater of your base salary at $160,000 or 35% of the net profit received from your accounts and project sales.

That’s it on compensation. See a problem?

What could possibly go wrong?

Patlovany resigned in December 2018. On his resignation date, he had made sales, but the profit wasn’t yet received until later. And does the agreement contemplate this contingency? Not a word—crickets!

Perhaps sensing its predicament, Five Star wrote to Patlovany that by resigning he “forfeited” these commissions. The lawsuit followed shortly thereafter.