Commission wages in California are based on the sale of products or services and are calculated as a percentage of the sale price. Pursuant to California Labor Code section 2751, commission agreements must be in writing, detailing calculation methods, payment frequency, and when commissions are considered earned. These agreements must be signed and provided to employees.
California law generally prohibits employers from deducting business costs from earned commissions. However, some deductions may be allowed if specified in the written agreement, such as discounts, returns, or employee-caused damages. Any changes to commission rates must be applied prospectively, not retroactively.
Key elements of a commission agreement include the calculation method, payment timing, employee’s primary duties, and when commissions are earned. Most sales employees are entitled to at least minimum wage in addition to commissions, unless classified as “exempt”. Commissions differ from bonuses or piece rate plans, which are typically based on reaching sales targets or production quotas.
Terminated employees are also entitled to earned commissions. California courts often award pro-rata shares for incomplete sales to prevent employers from avoiding payment by terminating employees before sale finalization. However, if substantial work remains and an employee quits voluntarily, they might not be entitled to the commission.
Both employers and employees should fully understand their commission agreements. Employers must ensure compliance with California law, while employees should keep accurate records of their sales and commissions. Clear documentation is crucial for resolving disputes or pursuing legal action if necessary. While commission-based pay can motivate sales employees, it’s important that these arrangements are structured fairly and legally to maintain positive employer-employee relationships.
Si tu empleador está reteniendo comisiones que te corresponden, contáctanos de inmediato.
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