American Express Owes Millions in Unpaid Commissions to Laid-Off Salespeople

A lawsuit filed against American Express (Amex) claims that the company owes millions of dollars in unpaid commissions to salespeople who were abruptly laid off in May of last year. The lawsuit, filed by 13 former employees, alleges that Amex changed its compensation plan without warning, leading to the loss of earned commissions and unjustifiable firings. The employees and attorneys involved in the case spoke on the condition of anonymity due to confidentiality agreements in their exit packages.

According to the lawsuit, Amex’s severance plan, established in 2019, promised employees laid off from the company two months of their base salary plus one week of pay for each full year of service. Senior employees were entitled to six months of base pay. However, the sudden restructuring resulted in laid-off workers receiving only a maximum of one month in severance pay, with some receiving nothing at all.

The drastic change in compensation affected top performers who lost hundreds of thousands of dollars they had already earned by encouraging clients to use Amex corporate credit cards. Even moderately successful salespeople faced losses of tens of thousands of dollars. Commissions made up a significant portion of salespeople’s pay, supplementing their modest base salaries.

The restructuring and layoffs created a culture of fear and confusion among salespeople, who felt excluded from the decision-making process and scapegoated for ongoing investigations within the company. Some salespeople remained bitter for months, engaging in disputes with the company over the purpose of the restructuring.

Amex spokesperson Adam Isserlis stated that the May 2022 overhaul was part of a regular review to improve customer service and leverage the company’s digital marketing capabilities for growth. He did not directly address the allegations made in the lawsuit.

Apart from the commission-related lawsuit, Amex is currently facing investigations into its small-business sales practices by the Office of the Comptroller of the Currency, the civil division of the Justice Department, and federal prosecutors in Brooklyn. The company maintains its cooperation with these inquiries.

The lawsuit sheds light on a multiyear effort by Amex to encourage business customers to charge employee payroll to their credit cards, which would increase the company’s payment volume and subsequently its revenue. The lawsuit claims that the Premium Wire product, designed to facilitate payroll charging, exploited a regulatory gray area and may have run afoul of IRS guidelines.

Amex salespeople were allegedly encouraged to sell Premium Wire, highlighting the tax advantages and the opportunity to convert rewards points into cash. The lawsuit suggests that senior managers within Amex were aware of and approved the product. However, Amex spokesperson Isserlis attributed the sales effort to a rogue group of employees who violated company policies.

The lawsuit against Amex seeks to hold the company accountable for the unpaid commissions and challenges the legitimacy of the severance plan implemented during the restructuring. As the legal battle unfolds, the case raises questions about compensation practices, regulatory compliance, and the treatment of employees within the financial services industry.