It is upsetting when you lose your income because you were laid off or terminated by your employer. Suddenly, you must rely on savings and maybe unemployment assistance to pay for life’s necessities.
Your final commission check will be critical to cover your finances. California law on commission pay after termination requires employers to pay employees all their earned commission immediately on the final day of employment.
In this article, we explain California law regarding commissions, what you need to know about commission agreements, and how to pursue a claim for unpaid commissions against your employer. If you have questions, contact us today.
What Is a Commission Payment?
Commission payments are wages you earn for selling your employer’s products or services. These payments are usually calculated using the number of products and services sold or the value of the sales.
Under California law, your employer must pay your final commission on the day you were terminated. If your employer fails to pay you, they may be penalized and liable for paying you an additional 30 days of commission.
However, keep in mind that this penalty is not enforceable if you refuse the final commission payment after termination or intentionally avoid attempts to deliver your final commission check.
Can My Final Commission Payment Be Deposited to My Account?
Yes, employers are allowed to deposit your final commission payment after termination. The bank or credit union where your commission will be deposited must be in California. Your authorization is also required for the employer to make the deposit.
Direct deposit for your commission payment after termination is voluntary! Your employer cannot require you to directly deposit your final commission to an account.
Your final payment will be made with a check if it is not deposited into your account.
What Should I Know About Commission Agreements?
California’s Labor Code requires employers to have a written commission agreement with every employee who receives commission as a form of their wages.
Your commission agreement will outline and govern all aspects of your commission. The terms of the commission agreement must always comply with California’s Labor Code and applicable federal laws.
Explains How Commission Is Calculation
The most important part of a commission agreement in California is the detailed explanation of how the company will calculate and pay your commission. The descriptions and language in the agreement should be clear and thorough. You should be able to read your commission agreement and know:
- The sales of products or services that qualify for commission,
- Tasks that you must complete to earn commission and require payment,
- How the employer will calculate your commission (e.g., based on amount of products sold or profits over a specified period of time), and
- The dates or frequency that you will be paid commission during the term of the commission agreement.
The commission calculation section of the agreement should leave you with no doubt about how the employer will calculate your commission. You should be able to complete the calculation to ensure the accuracy of your commission payments.
Can My Commission Agreement Be Modified?
Your commission agreement may contain language that allows the employer to amend or modify your agreement. It’s important to have a basic understanding of the process the employer must follow to do so. This knowledge can help protect you from unexpected agreement terms, expectations, or requirements.
California Law also prohibits employers from intentionally changing an employee’s classification to avoid paying earned wages and commissions. For example, an employer cannot purposefully deny an employee’s commission payment by claiming their position was changed to an independent contractor.
California’s Labor Code prohibits employers from engaging in this type of activity. Employers can be liable for penalties for knowingly reclassifying your employment to avoid paying wages.
Claims for unpaid wages can be very complex because they require a deep understanding of California labor laws, commission agreements, and federal labor laws. The knowledgeable attorneys at Workplace Rights Law Group know employers’ methods and strategies to avoid paying wages.
We are available and equipped to answer questions about your unpaid commission after termination. Our team can also advise you on the legal remedies best suited to recover your unpaid commission. If you have not been paid wages, do not navigate this process alone.
Do Commission Agreements Address All Payment Plans?
California law does not require commission agreements to address:
- Bonuses for short-term incentives;
- Temporary, variable incentive plans that do not decrease; and
- Bonus and profit-sharing plans, as long as plans are not compensation for the employee based on sales percentages or profits.
Nevertheless, if you do have a written agreement concerning these types of payments, your employer must abide by the terms of that agreement.
How Much Time Do I Have to File a Claim for Unpaid Commission?
The number of years you have to file a claim depends on your unique circumstances. If your employer is refusing to pay your final commission or taking illegal deductions, you have three years from your final date of employment to file a claim.
If you signed a commission agreement with your former employer, then you have four years to submit a claim for breach of contract.
The state Labor Code allows claims to be filed as soon as your employer fails to pay your final commission. Unpaid commission claims can be complex. Let an experienced attorney at Workplace Rights Law Group review your situation and advise you on the applicable filing deadline.
Contact Workplace Rights Law Group to Start Your Claim
Workplace Rights Law Group is selective about which cases we agree to represent. This gives our lawyers enough time to craft an individualized strategy for your case. The experienced lawyers at Workplace Rights Law Group know that each case is unique.
Our team of lawyers will never treat your case using a one-size-fits-all strategy. Workplace Rights Law Group provides meaningful advice to every client with expertise and experience previously only found at big law firms.
Contact Workplace Rights Law Group if you have not received your final commission payment after being terminated. Our team of five lawyers has over 75 years of combined experience working with employment claims. We know the employers’ playbook and will help keep your case ahead of the employer’s game.
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Theo Khachaturian
Theo is a trial & appellate lawyer whose practice has emphasized wage-and-hour class actions, business disputes, wrongful termination, discrimination, harassment, and intellectual property theft. He has tried civil cases and argued before various California Courts of Appeal.