Unpaid Commissions
In the competitive world of sales and services, commission-based compensation is a common incentive used by employers. While this system can motivate and reward employees, it also opens the door to potential disputes over fair compensation.
When discrepancies and disagreements arise over commission payments, experienced legal representation becomes crucial to receiving the compensation you’re owed. At Rudy, Exelrod, Zieff & Lowe, LLP, we have extensive experience negotiating and litigating commission disputes. Let’s discuss how commission-based compensation systems operate, what causes disputes, and how our experienced employment attorneys can assist you.
How Commission-Based Compensation Works in California
Commission-based compensation is treated like any other employment wage in California, which means it is illegal for an employer to withhold the commission payment that you have earned. As a general rule, your employer is required to pay you a commission if you substantially complete the necessary work to earn the compensation. This may be true even if you are no longer employed by the company.
If your employer doesn’t pay all of your earned commission when you quit or are terminated, then in addition to any unpaid commissions, your employer may have to pay you “waiting time penalties.” These penalties are one day’s wage for every day your employer delays in paying you your regular salary, up to a maximum of 30 days.
California law also requires employers of commissioned employees to put in writing their commission plans, including the method by which the commissions are calculated and paid. Suppose you are a commissioned employee, and your employer hasn’t provided you with a detailed written commission plan. In that case, you are vulnerable to arbitrary and unfair calculation of the amount of your commission payments or, worse, the withholding of all of your commission payments.
Common Commission Disputes
Disputes over commission payments can arise from various scenarios:
- Misinterpretation of Agreements: Ambiguities or misinterpretations in the commission agreement can lead to disagreements over the amount owed.
- Changes in Commission Structure: Employers may change commission structures, affecting earnings without adequate notice or agreement.
- Delayed Payments: Employers sometimes delay commission payments, affecting the financial stability of employees.
- Unpaid Commissions: Disputes may arise when an employee is not paid a commission they believe they have earned.
Having an attorney can significantly influence the outcome of commission disputes. Lawyers not only bring their legal knowledge but also offer strategic planning to navigate these complex issues. They work to ensure that employees are fairly compensated according to their contractual agreements and the law.
Our Track Record of Successful Commission Compensation Claims
Rudy, Exelrod, Zieff & Lowe, LLP has successfully represented employees who were unfairly and illegally denied their rightfully earned commissions. We help our clients navigate this all too common employer practice, litigating against startups as well as the largest companies in California.
Through skillful negotiation and determined advocacy, we have recovered millions of dollars in unpaid commissions for our clients. In one case, an arbitrator awarded our client over $6 million in unpaid commissions, interest, and attorneys’ fees. In another case, we recovered $717,000 for three account representatives at a tech firm. We have achieved numerous six-figure awards for sales executives. While we routinely give employers the opportunity to negotiate a fair outcome, we are not afraid to take these cases to trial when necessary—whether in front of a judge, a jury, or an arbitrator.
Commission-based compensation can be a double-edged sword, offering high rewards but also potential for disputes. Legal representation in these scenarios is not just beneficial; it’s often necessary to ensure fair compensation. If you find yourself in a commission dispute, seeking legal advice should be your first step. A skilled employment attorney can provide the guidance and representation needed to navigate these complex issues effectively.
If you have questions about your commission payments or any other issues related to your wages or bonuses, please contact one of our attorneys.