Commission Pay Lawyers

In California, employees’ rights regarding commission pay are governed by specific regulations to ensure fair compensation practices. Commission pay, a form of compensation based on sales or performance, is common in sales-oriented industries. Here are the key rights and regulations concerning commission pay for employees in California:

1. Written Contracts: California law requires that commission pay arrangements be set forth in a written contract. This contract must detail the method by which commissions will be computed and paid. The employer must provide a signed copy of the contract to every employee who is a party to it and obtain a signed receipt for the contract from each employee.
2. Earned Commissions: Commissions are considered earned according to the terms of the contract. California courts generally enforce the specific terms of the commission agreement to determine when a commission is earned, whether upon making a sale, upon payment by the customer, or based on other criteria specified in the contract.
3. Final Pay: Earned commissions must be paid to employees upon termination of employment. The timing of these payments may depend on the terms of the commission agreement and the circumstances of the termination. California law mandates that all earned wages, including commissions, be paid promptly upon termination or resignation, depending on the situation.
4. Minimum Wage Requirements: Employees who earn commissions must still be paid at least the California minimum wage for all hours worked, regardless of the commissions earned. This ensures that employees receive a basic level of compensation, even if their commission earnings are low during a particular pay period.
5. Overtime Pay: If an employee is non-exempt from overtime laws, they may be entitled to overtime pay. The calculation of overtime pay for commissioned employees can be complex and depends on whether the employee is paid solely on a commission basis or receives a combination of hourly wages and commissions.
6. Rest and Meal Breaks: Commissioned employees, like all non-exempt employees in California, are entitled to rest and meal breaks. Failure to provide these breaks can result in penalties that the employer must pay to the employee.
7. Expense Reimbursement: Employees in California are entitled to reimbursement for necessary expenses incurred in the course of their employment. For commissioned employees, this might include expenses related to making sales or earning commissions.
8. Retaliation Protection: Employees are protected from retaliation for raising concerns about their commission payments, for filing a complaint, or for participating in an investigation regarding wage and hour violations.

Commission agreements and the laws governing them can be complex, and disputes over commissions are not uncommon. Employees who believe their rights regarding commission pay have been violated may file a complaint with the California Labor Commissioner’s Office or seek legal counsel for advice and representation.