Avoid Common Mistakes For Commission And Bonus Plans | Mann & Elias
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Avoid Common Mistakes For Commission And Bonus Plans


If you are an employee who works in a job that pays commissions and bonuses, which many sales positions do for their workers, you know how vital that income is to your finances. While in most cases you have no problems whatsoever with your commissions and bonuses that get fairly paid to you, situations may arise where your employer creates commission and bonus plans that may change the rules of the game.

When this happens you may find yourself suffering a severe drop in income or constantly having to argue with your employer over being paid what you earned. Since employers often create commission and bonus plans that ultimately result in numerous problems, don’t think you can do anything. Instead, speak to an employment attorney in Los Angeles who specializes in commission and bonus plan disputes.

California Labor Code 2751

If you are an employee who relies on commissions and bonuses as part of your pay package, you should pay close attention to section 2751 of the California Labor Code. This section, which deals with commission agreements, states that any agreements must be in writing and that employers are required to give employees signed copies of these agreements. If you don’t have a written contract with your employer anything can happen to your commissions and bonuses and ultimately it may be your word against that of your employer. Rather than let this happen, speak to our Los Angeles lawyers for bonus pay.

Commission Bonus Disputes

When dealing with commission bonus disputes with your employer, you must focus on more than how much money you believe you are due. For example, when these agreements are first drawn up, make sure you meet with your employer to know when the commission or bonus begins to accrue. While in some instances, it may not be until the sale is final, other agreements may have the commission accruing from the moment you first approach a customer. Since you and your employer can have different versions of how an agreement is supposed to work, don’t try to handle this on your own should the situation escalate.

Shared Commissions

If there is one aspect of commission and bonus agreements that is almost sure to result in legal disputes, it is the concept of shared commissions. In these instances, multiple employees may claim they played a part in closing a sale and thus deserve a share of the commission. Suppose an employer’s commission and bonus plan is not very specific about how multiple employees are expected to share commissions and the requirements needed for an employee to claim part of a commission. In that case, things can get ugly in a hurry. If you believe you have had to share a commission with coworkers unfairly, let a lawyer from Mann & Elias handle your case and work out a solution to your problem.

When is the Commission or Bonus Paid?

While most commissions and bonuses are included on an employee’s paycheck each time they are paid, that is not the case with all employers. In some cases, employers do not pay until the end of the month, quarter, or fiscal year. As a result, should an employee leave their job before these commissions are paid, employers often say they no longer owe the money to the former employee. However, based on rulings from the California Supreme Court and other lower courts within the state, employers are generally forbidden from refusing to pay compensation to employees that have already been accrued. If you believe now is the time you need to sue for unpaid bonuses, put your case in the hands of an experienced legal professional.

What Happens if Products Get Returned?

If an order gets canceled or a customer returns a product, most commission and bonus plans do not address this matter. Therefore, it is often left up to the employer’s discretion regarding handling these situations. While in some cases the employee is allowed to be paid their commission or bonus, some employers believe no extra payment is due since the transaction was not ultimately successful. Since there will be plenty of room for legal maneuvering in these situations, employees who try to handle these matters without legal representation are rarely successful. To make sure you receive the money you deserve for your hard work, consult with lawyers who understand these situations and how to force employers to do the right thing when it comes to paying their employees.

Waiting Until Problems Arise

At many businesses, commission and bonus plans may or may not get spelled out to employees. Because of this, most companies wait until disputes arise before trying to fix any potential problems. At some companies, intimidation tactics and threats of being fired may be used by an employer in an attempt to keep from paying commissions and bonuses that employees earned. These tactics are illegal under California law. Do not sit back and allow your employer to intimidate and scare you into not getting the money you deserve. Make sure you hold your employer accountable for their actions and get your much-deserved compensation.

Even if you are on good terms with your employer the time may come when a commission or bonus dispute may happen. When it does, do not assume your employer will do the right thing. If you need legal advice and representation regarding a commission or bonus dispute, schedule an immediate consultation with us at Mann & Elias.


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