Rights of Employees Paid by Commission in California | Grey Law
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Rights of Employees Paid by Commission in California


You work hard. You give all your talent and energy to get the job done and to meet the goals of your employer. You work on commission. This is not always the easiest line of work in which to make a living. However, you are still an employee of the company that hired you, which means that you still have rights.

The popular image of the commission worker as someone who is without any security or support from their employer is an inaccurate one. Do not allow yourself to be mistreated, short changed, and otherwise abused by your employer. Get the facts on what counts as a commission, when you must be paid, and whether you are owed a commission when you leave the company. If your employer has violated any of the laws regarding commissions in California, then you should take legal action against them. To do so, you will need to pursue legal representation. An employment attorney in Los Angeles will help you get the money that is owed to you from your employer.

What Exactly Is a Commission?

Be sure you are on firm ground with this definition. In the eyes of the law, a commission consists of earnings based on a percentage of the price of goods or services an employee sells. A payment that is discretionary rather than mandatory—bonuses, for example—do not count as a commission.

Why You Must Obtain a Written Agreement

You may be excited about the prospect of earning money through sales and commissions. However, your employer must give you a written agreement that explains how your commissions will be calculated and the frequency with which you will be paid. This commission plan must be signed by you and your employer, as it is a formal contract.

The contract will detail how you will go about earning commissions. If the commission plan is based on sales, then the contract must spell out whether you are to be paid when the payment is received from the customer or at some other time. The contract must also detail how commissions are to be calculated—whether there is to be a percentage based on the total purchase price or the net profit made by the company.

If you have any questions about your contract, you should ask your employer. If they do not give you a satisfactory answer, then you should speak to a lawyer before you sign the contract.

How Does Overtime Work?

In many instances, people who work on commission do not punch a timeclock in and out of work. You may need more flexibility in when and how you work in order to make the sale. This may mean that you are not entitled to overtime when you work more than eight hours in a day.

Most of the commission workers who fall into this category are outside salespersons. If you spend more than half of your time out of the office making sales, collecting orders, or getting contracts for products or services, then you are an outside salesperson and not entitled to overtime.

You also may not qualify for overtime in the following instances:

  • You work in a technical, clerical, mechanical, or retail industry
  • You earn at least one-and-a-half times the minimum wage per hour
  • Half your pay is earned through commissions

If you do not meet any of the above conditions, then you are entitled to overtime. To calculate your overtime, you should start with your hourly rate—your commission rate or your total earnings for the week. Overtime pay consists of one-and-a-half times this pay. If you work double shifts, you are entitled to twice the regular rate.

Receiving Your Pay

The contract you signed with your employer will determine the regularity of your pay. However, you must be paid at least twice a month. For commissions earned between the 1st and 15th of the month, you must be paid no later than the 26th of the month. Commissions earned between the 16th and the end of the month must be paid by the 10th of the month following.

Again, you may have a contract which states that you will not receive a commission until your employer receives the money from the client. Once such a payment has been made, the aforementioned schedules kick in.

Leaving Your Employer

If you resign or you are laid off or fired, then your employer must pay all the commissions you earned. This must happen in a reasonable amount of time. If you quit without a 72 hours’ notice, then your employer has 72 hours to pay commissions. If you quit with a 72 hours’ notice, then your employer must pay you on the last day you are with the company.

Do I Need a Lawyer?

To answer this question, you will need to look at a few things. You must first determine whether the written agreement the employer wants you to sign is fair and legal. There are plenty of chancers and cowboys in every industry—people who are trying to exploit your talent and labor without properly paying you. You could be on the cusp of joining such a firm, or you may be about to join a truly innovative company that asks you to take great risks with the promise of huge rewards. 

You should also speak to a Los Angeles attorney for sales commissions if you feel as though your wage and hour rights are being violated. This can happen after you sign a written agreement that is fair and legal. Do not allow yourself to be taken advantage of. If you believe that something is not right, we are here to help you if you have not received the money you are owed after you leave the company. We act as your intermediary and will pursue your case until it is won.


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