Commissions are compensation paid to a person for sales-related activities they perform for a company – and unpaid commissions are a bigger problem than you think. When you enter into a written commission agreement with an employer, the employer is required to pay you what you’ve earned.
Unfortunately, it doesn’t always work that way.
What Are Commissions?
Commissions are wages a person earns as a result of selling a product. Commissions generally involve a percentage of sales that an employee makes or the number of sales an employee makes. These are examples of commission wages:
- An employee earns 20 percent of every annual membership he sells at a golf course
- An employee is paid a certain sum of money for every book she sells
- An employee is paid 50 percent of the cost of every website she sells
- An employee is paid a certain sum of money for every ukulele he sells
Some of the most common commission-based jobs are:
- Real estate agents
- Door-to-door sales people
- Independent sales reps
- Loan officers
- Insurance sales agents
- Salon workers and hairstylists
What Are Unpaid Commissions?
The term unpaid commissions refers to money that an employee is entitled to receive based on his or her work, but that the employer has not paid.
Your employer is required to pay you your commissions within specific timeframes:
- For commissions you earned between the 1st and the 15th of the month, your employer must pay you no later than the 26th of that month
- For commissions you earned between the 16th and the last day of the month, your employer must pay you no later than the 10th of the next month
Commissions vs. Regular Pay
Commissions are earned by actively selling a product or service – not by performing a service. Here’s an example of when an employee is entitled to a commission:
A salesperson at a car dealership sells a brand-new Camaro. She is receiving a commission because she facilitated the sale between the car dealership and the buyer.
Here’s an example of when an employee is not receiving a commission:
A masseuse is paid a percentage of the hourly rate the massage studio charges a customer. The masseuse doesn’t sell his services – the studio does.
Are Commissions Wages?
Commissions are considered wages in most cases. (If you’re not sure if your pay counts as wages, your best bet is to get in touch with a Glendale employment lawyer.)
Just receiving a percentage of a sum doesn’t necessary qualify you as a commission-based employee, though. In order for your commissions to count as wages, you must be responsible for selling the goods or services your pay is based on.
Did Your Employer Withhold Your Commissions?
If you believe your employer has illegally withheld commissions it owes you, you may want to talk to a Glendale employment attorney. In many cases, lawyers are able to help commission-based employees recover the wages they’re owed, so call us at 818-918-3876 for a free legal consultation today.