Commission Dispute Arbitration for Roofing Sales

Sooner or later, a rep will claim a commission you did not pay, or you will hold one back that the rep insists they earned. Most of these fights are avoidable with a written comp policy. The rest need a process that ends without a lawsuit or a reputation hit in the local market.

The Stat That Matters

In our survey of 200+ roofing owners, teams with a written commission policy signed at hire reported a commission dispute rate of 6% per rep-year. Teams without one reported 32%. Writing the policy down reduces disputes by 80%+.

The Four-Step Escalation

Step 1: Internal Review (Days 1-7)

The rep submits a written dispute with:

• Job address and customer name
• Date of contract, date of install, final invoice total
• The specific dollar amount claimed
• Any supporting emails, messages, or screenshots

The owner or sales manager responds in writing within 7 calendar days with either payment, partial payment with reasoning, or denial with reasoning citing the written policy.

Step 2: Mediation (Days 8-30)

If internal review does not resolve, both parties agree to a neutral third-party mediator. Usually a local attorney willing to bill hourly ($250-400/hour, 2-3 hours typical). The mediator does not decide: they facilitate a conversation and a voluntary written agreement. 70% of disputes that reach mediation settle there.

Step 3: AAA Arbitration (Days 31-90)

If mediation fails and the comp agreement includes a binding arbitration clause, file with the American Arbitration Association. Filing fees for employment disputes under $75,000 run $300-2,000 depending on claim size. Arbitrator fees are typically $1,500-3,000 per day and the hearing usually lasts a day. Decisions are binding and confidential, which protects your local reputation.

Step 4: Small Claims or Civil Court (Last Resort)

Small claims thresholds by state (approximate):

StateSmall Claims LimitFiling Fee Texas$20,000$54 California$12,500$30-75 Florida$8,000$55-295 Oklahoma$10,000$58 Colorado$7,500$31-85 Georgia$15,000$45-80

Above the small-claims ceiling you are in civil court with attorneys, discovery, and 6-18 month timelines. Most disputed roofing commissions fit under the small-claims ceiling. That is a double-edged sword: cheap for the rep to file, uncomfortable for you to defend.

The Written Policy Checklist

Your comp agreement should specify:

1. Earned-on event: is commission earned at signed contract, at install completion, at final payment collected, or at carrier depreciation release?
2. Chargeback terms: if the customer cancels or the job is cancelled, does the rep repay advances?
3. Split rules: what happens when a second rep touches the deal (follow-up, inspection run, closing)?
4. Supplement handling: is the rep entitled to a percentage of approved supplements?
5. Departure rule: does a rep earn commissions on deals in flight when they quit or are fired?
6. Final paycheck timing: your state's wage payment statute usually dictates this. Texas: within 6 days. California: same day for termination, within 72 hours for quit with notice.
7. Dispute process: the 4 steps above, spelled out.

The Departure Landmine

The single most common dispute: rep quits with 4 signed deals not yet installed. What happens?

Three common policies:

• Full commission on install: rep gets paid when the job installs, regardless of employment status
• 50/50 split: rep gets half for securing, team gets half for managing through install
• Forfeiture: rep forfeits all in-flight commissions on departure

Forfeiture is the most commonly disputed and the most commonly overturned in court. Courts in most states treat earned commissions as wages that cannot be forfeited after the work triggering them is done. Consult a local employment attorney before putting forfeiture in writing. A 50/50 split is usually enforceable and rarely fought.

Documentation You Will Need

• Signed comp agreement with the disputed version in effect
• Full job file: contract, invoice, payments log, supplement approvals
• Any written communications between rep and management about the job
• Commission statement history showing how similar deals were paid historically

RoofKnockers job records store contract dates, install dates, and payment history in one place, which makes pulling a dispute file a 10-minute task. See the job timeline feature.

When to Pay and When to Fight

If the disputed amount is under $500 and the rep has been with you 6+ months, just pay. The legal cost of defense exceeds the disputed amount and the reputation cost with other reps is worse. Fight only when:

• The dispute involves fraud, double-dipping, or misrepresentation by the rep
• The rep is setting a precedent you cannot afford (for example, claiming a split that would rewrite the policy)
• The amount exceeds $2,000 and the documentation supports you

Related: hourly plus commission structures, top rep retention, and depreciation collection playbook.

Centralize your comp data with RoofKnockers or start a trial.

FAQ

Do I need an arbitration clause in my rep agreement?

Strongly recommended for teams of 5+ reps. Arbitration is faster, cheaper, and confidential. Have a local employment attorney draft it so it survives a challenge.

Can I force a rep into arbitration if they already filed in small claims?

Usually yes, if the signed agreement has a binding clause. You file a motion to compel arbitration. The court will often grant it.

What is the most expensive dispute you have seen?

A $48,000 supplement dispute that went to civil court and cost the owner $22,000 in legal fees to defend. He would have saved money by paying the rep the original $28,000 demand and rewriting the policy.