Unpaid Commissions

Do You Have Unpaid Commissions from a Former or Current Employer? How an Employment Attorney Can Help

Do you believe your employer or a company you used to work for owes you unpaid commission money? This problem is a lot more common than you might think, including in California, which has fairly worker-friendly laws in this area. Here’s what you need to know about unpaid commissions and how working with an employment lawyer can help you recoup commission you are owed from an employer who refuses to pay it.

What Is Commission?

Commission is money paid to a contractor or employee based on completing a predetermined task. Usually, commission is paid as a percentage of sales dollars or sales growth, but it can also be a flat fee. It can be based on the number of units of merchandise sold, appointments booked, or extra hours worked during a busy season.

Sometimes commission is paid to employees who can achieve a difficult assignment, like getting a competitive client to sign with the company or to stay with the employer for a certain amount of time. In some MLM (multi-level marketing) ventures, like health and beauty products, commission is paid on the number of people you bring into the company to also sell the same products.

Most commonly, commission is paid in addition to a base salary as an incentive to employees. However, there are employment situations where commission makes up 100 percent of a worker's income. More and more employers are using this model to avoid paying salaries. They only pay an employee for their results, not for simply showing up and doing the basics of their job. Sounds fair, right? It can be, but there are sadly some employers who take advantage of various commission schemes to cheat employees out of their rightful earnings.

How Do Unscrupulous Employers Cheat Workers Out of Commission?

Unfortunately, there seems to be no end to the number of bad employers who don’t pay their employees commission as promised. This is nearly always due to greed and not a mistake in bookkeeping. How do employers cheat their workers out of their hard-earned commission? Perhaps one of these situations below applies to you.

Changing the commission rules midstream

This is a very common form of trickery used against employees all the time. The employer promises the employee they will receive a percentage of a sale, such as 10 percent of an executive’s salary if a recruiter can find and get hired the right candidate for the job.

Then once the hiring process is underway and a candidate the recruiter found is close to signing their contract, the employer decides to change the commission plan for the recruiter. Instead of 10 percent of the executive’s salary, they now only want to pay 5 percent.

Changing commission rates for sales in the pipeline is not only unfair but may also be illegal, which we discuss below. That doesn’t stop employers from trying this maneuver, however.

Firing an employee after they make a big sale with a large commission

Even worse, some employers may fire an employee after they achieve a goal that would result in a major commission payout. For instance, a biotech company might “let go” a sales representative who just brought on a new medical center that bought 100 diabetic screening devices, which would normally result in a huge commission check.

The biotech firm may claim that the medical center is really a “house account,” not an account for the sales rep. They may scrape up a reason to fire the employee and, in the process, refuse to pay commission on the 100 devices sold.

Not paying commission to an employee who voluntarily leaves the company

What about employees who leave of their own free will? Employers still try to cheat them out of commission too, claiming they forfeit their right to commission if they leave before the end of the month, quarter, or year, which are typically commission payout times.

What Does California Law Say About Unpaid Commissions?

California has strict laws about unpaid commissions, although these laws can be confusing and not particularly clear-cut for the average worker. This is why many turn to an employment attorney for assistance with their case.

In many cases, unpaid commissions are considered wage theft. You can file a wage theft claim with the State of California Department of Industrial Relations just as you can for things like unpaid overtime or illegal deductions from your wages, but again, this can be a bit outside the wheelhouse of many folks. Also, it’s hard to find the time to fill out all the forms and pursue the documentation needed if, say, you’ve been fired and need to put those hours into finding another job.

Why are unpaid commissions in California often so complex? There are multiple factors at play in the majority of cases, including:

• Is the money owed in question actually considered commission in the eyes of the law, or is it perhaps another type of payment, like a bonus or tip?
• Did you have a contract with the employer regarding the details of the commission plan?
• Was your commission payment plan in compliance with California law?
• Was your incentive plan for commission executed or signed in a way that put you under duress or at a significant disadvantage with the employer (an unconscionable contract)?
• Did you sign a forfeiture clause stating you relinquish the right to your commission if you quit before it is paid? (Enforcement of this varies by county in California due to court differences.)
• Were you wrongfully terminated so the employer did not have to pay your commission?
• Are you working as a misclassified 1099 contractor when you should be an employee?

How Can an Employment Attorney Help with Unpaid Commissions?

Every unpaid commission case is unique, based on the company and employee in question and the issues outlined above. At the Employee Law Group, we help get to the bottom of these cases by:

• Asking the right questions to determine if you have a case
• Reviewing any contracts you signed with an employer
• Using our knowledge of employment law in California to hold unethical employers accountable
• Putting our team of experienced legal professionals to work for you so you can focus on work or finding new work
• Helping you file any necessary paperwork with the authorities
• Negotiating with your employer or former employer
• Representing you in court, if it comes to that

If you are owed unpaid commissions, you have likely budgeted for that income and need it for your mortgage, car payment, student loans, or other essential expenses. You don’t have to suffer in silence. The Employee Law Group can help you get back the money you are owed, if you indeed have a case, and we can also help with related issues, such as job reinstatement for wrongful termination.

To learn more or to schedule a free, no-obligation consultation, call us today at 310-407-7358 or reach out online and let us know how we can help with unpaid commissions.