Wage Disputes And Unpaid Commissions. When Things Get Complicated

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Denis ZilberbergJune 8, 2018Wage & Hour Law

Wages are supposed to be simple right? Well in some cases, like hourly wages they are. Say if you get paid $25 an hour then you multiply that by the number of hours you work, and multiply again by the weeks in a month and boom you have your wages for the month. The complications come in when you have to meet certain performance targets to earn your wages.

What disputes can occur when performance-based wages are concerned?

There are multiple issues that can be the cause of a wage dispute. The following are some examples:

  • What must the employee do to be considered the originator of a particular sale?
  • What happens if the employee closes a sale but the customer never pays for the product?
  • What if the salesman closed the sale but the company ships a defective product or otherwise causes the sale to be cancelled?
  • What if the commission formula is based on meeting an annual target, but the Company decides to restructure the commission formula halfway through the year?
  • What if the employee quits or is terminated after making a sale but before the customer has paid for a product?

How to resolve these issues?

The first step to take when attempting to resolve wage issues is to look closely at the contract. Within the state of California, an employee’s commission contract is based on a set of rules, regulations, and policies that are set out for the employee to follow and targets to hit in order to receive a commission. This contract also includes the bonuses and commissions that can be expected for hitting these targets. This contract is enforceable even if there are at-will termination of contracts available.

So simply for a commission-based contract, there does not need to be a signed piece of paper for a contract to exist. A unilateral contract is one in which a “unilateral” offer to pay for performance is communicated by the employer. This type of contract is accepted in California.

What does this mean when it comes to unpaid commission?

This means that once the tasks required by the company to earn commission are completed the employee’s right to a commission is immediate. This can prohibit the employer from changing the terms of commission for the rest of the year.

Common misconceptions made by employers

Because the law states that the employer can terminate a contract at will, then most employers believe that the contract for compensation can also be changed at will. Employers sometimes also believe that the commission can only be earned when handed out by the employer. This is untrue for past sales.

Contact a Los Angeles wage and hour issue lawyer:

It is highly frustrating when wages and commissions are being withheld by an employer, and it can also lead to financial hardship. When this happens a Los Angeles wage and hour issue lawyer is here to help. Call 310-981-3404 for assistance from a Los Angeles wage and hour issue lawyer at The Kaufman Law Firm.


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