In the state of California, laws for commission pay apply to all workers who earn them. Some of the most common commission-based careers include:
- Independent sales representatives
- Insurance sales agents
- Literary agents
- Loan officers
- Real estate agents
- Salespeople who go door-to-door
- Salon workers and stylists
Types of Commission-Based Jobs
There are generally three types of commission-based jobs. First, there are commission-only jobs, such as some sales jobs. Then, there are workers who draw a small salary, but the majority of their financial compensation comes by way of commissions. Finally, there are jobs that involve a draw on commission-based salary; in these jobs, the worker receives a salary, but his or her commissions are supposed to exceed it and the salary is only there for weeks or months when the worker’s sales didn’t bring in enough money in commissions.
What is a Commission?
A commission is a type of compensation paid to a worker for the services they perform. Usually, that’s based on a percentage of the worker’s sales or the profits made from sales, or it’s based on the number of sales the worker makes.
Commissions are payments that a worker is entitled to receive – the employer must pay them. They’re not “discretionary payments” like performance bonuses are. Unpaid sales commissions mean that your employer could be breaking the law.
California Laws on Commission Pay
In California, compensation agreements that involve commission pay must be in writing. The agreement has to specify how the employer will tally commissions and how it will pay them to the worker. If you’re the employee on the other end of this type of agreement, your employer must provide you with a copy. Your employer also must get a signed receipt from you that states you received the contract.
California’s definition of wages includes sales commissions, which means employers must pay them to you. (The way you earn commissions is outlined in your signed commission agreement, which is sometimes also called a commission plan.)
When Does Your Employer Have to Pay Your Commissions?
Your employer has to pay your commissions once you’ve earned them. In some cases, that’s when the customer pays; in others, it’s when a customer signs up for a product or service. That’s all outlined in your commission agreement, as well.
After you have earned your commissions, you fall under California’s payday laws. Those state that you must be paid at least twice per month. Here’s what to know:
- 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
Even if you quit your job or your employer fires you, you have still earned those commissions. If you quit without 72 hours’ notice, your employer has 72 hours from the time you quit to pay you any commissions that it can reasonably calculate. If you do quit with 72 (or more) hours’ notice, your employer must pay you your commissions on your last day of work.
Did Your Employer Withhold Commissions You Earned?
If you believe your employer has withheld commissions that you’ve earned, you may want to talk to a Glendale employment lawyer who can help.
Call us at 818-805-1645 for a free case review right now. If you’re entitled to compensation, we can help you get it.