How long is the employer obligated to pay commission to a terminated employee?

How long is the employer obligated to pay commission to a terminated employee?

Asked on February 20, 2019 under Employment Labor Law, Nebraska

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

The rules for paying commissions are not set by law: they are determined by the agreement, whether written or oral (unwritten) between the employer and employee pursuant to which commissions were earned. It can be that payment of even earned commissions stops on termination of employment (i.e. be employed to be paid); it can be that all earned commissions are paid out even after commissions end; for jobs where there may be recurring commissions (e.g. from renewals), it could be that the ermployee gets any amounts accrued or earned while he/she was still employed (even if they are actually paid later) but does not get commissions for renewals occuring post-employment; etc. It can be anything, since there is no law on commissions: they are determined by the agreement and practice (which can be used to show agreement) of the parties and are inherently "contractual" in that they are based on what the parties can be shown to have agreed to.
If there is no explicit agreement about how commissions are handled in this situation, look to what has happened to other terminated employees: past practice sheds light on the terms under which commissions were earned and paid. If that is no helpful, look to your industry's norms or common practice, since that informs the context and so can be used to determine the reasonable expectations of the employer and employee, who in the absence of anything to the contrary, can be said to have worked in line with what their industry does.


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