Earned Commissions - Payment After Termination | Grey Law
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Earned Commissions – Payment After Termination


You have many employees who expect that they will receive payment on their last day. Either that or at their regular pay period. How commission payments go through, however, will often differ in schedule, and sometimes conflict exists on whether someone made a commission or not. Problems especially arise around this contentious issue as an employer might argue that the employee didn’t fully earn their commissions.

How Must They Pay Commissions

How they have to pay commissions will largely depend on the circumstances surrounding it. You have a number of factors that will sometimes come into play that you have to consider. This includes work that employees may have performed before they were terminated, state wage laws and the commission agreement.

What Does State Law Say About Commissions?

Each state will vary. You should speak with your employment attorney in Los Angeles to have a better understanding of it. In some states, employers can’t withhold the commission before the severance of the relationship. You have other states where they will talk about when exactly you have to pay the commissions to a past employee. A lawyer can help you to understand the specifics of your case and how they do it in your state. In California, they consider commissions as a form of wage, which means that the employer must pay the employee within a specified day, or they will face legal ramifications.

Let’s say that the employer is unable to make a reasonable calculation of what the commissions were. If that happens, they can wait until they can make a reasonable calculation. These laws can be tricky. Having a strong legal strategy will give you the best chances at moving forward.

The Written Plan for Commissions

Oftentimes, when you look at the people who earn commissions, you will find that they have a written commission plan. What does that mean? It means that a certain set of activities must be outlined and followed for the commission to be correctly earned. In addition, the employer might indicate if any differences to the final commission paid exist. It might say if the employee is entitled to a certain amount of the commission.

As Los Angeles attorneys for payments after termination, we always advise that our clients seek us out because that will help them to understand their rights better. You don’t want the other side coming in and walking all over you. We always tell our clients to keep and maintain all contracts because they can use this later if it is needed. You want to keep all the employment handbooks and everything else that details your job because you could potentially use it later.

Must Complete the Work Activity

Before you can say that they have earned their commission, they will first have to complete a work activity because this will dictate how it proceeds. These are certain work-related activities that come in relation to your employer. You will have to have completed these activities for you to receive the commission. They will use this to calculate the commission, and they usually require that you complete the task within a certain time frame. This happens during an ongoing employment relationship.

Not Always an Easy Task to Calculate the Commission

You have situations where it may not always be an easy task for you to calculate the commission. While California law does consider commissions as part of the wages, and they must be paid at termination, you do have some special circumstances when it comes to commissions that you need to understand. For example, employers usually won’t pay for commissions on the same day that they were earned. For example, a commission that gets tied to a sale may not actually happen until they have finalized the sale. That occasionally causes a delay of when you will receive the commission. In some cases, we have seen this lead to multiple commission checks. The agreement made between the two parties will have an impact as well as the state law.

Factors Considered

Before they will decide if a commission is owed, they will look at several factors to determine whether or not the employer owes commission fees. Some of the things that will determine this include the terms located within the contract, the involvement of the employee getting the sale, and the circumstances that involved both the termination of the employee and the sale of the item. With those things in mind, you can get a better idea. You could also schedule a consultation with our law firm, to help you learn the circumstances of your case better. This will help you to determine how to best proceed. Usually, they have to take several factors into consideration when it comes to this, and state law in California will protect you up to an extent.

Employers: Should They Pay Commissions

If you decide to offer commissions, you provide your employees with great incentive to work harder, but you will also need to clearly outline the details because you don’t want anything that can be used against you in the courts. You need a criteria for when the sale closes, the responsibilities of the employee in the transaction and guidelines for how the employee will receive compensation after their termination of the employee. Leave nothing to question. Our lawyer can help you draw up a strong contract.

Whether you are an employee or an employer, when conflict arises, you would be wise if you were to seek out legal counsel because they can effectively defend you or help you to receive the compensation that you deserve.


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