Can a broker hold on to commissions of an agent?

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Can a broker hold on to commissions of an agent?

If a broker drops sponsorship of an agent, can the broker hold on to commissions that were already invoiced with payment due to the agent ? If so, how long can they hold off on paying the agent ? If company policy states that if an agent leaves or is fired commissions will be reduced to 25% of the gross commission. Can the broker refuse to pay the commission all together?

Asked on July 22, 2010 under Real Estate Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

It depends on the conditions and terms of employment. As a general rule, in the absence of anything to the contrary, money that is earned by an employee, whether wages for hours worked or commissions for homes sold, is due that employee, even if the employee is fired, terminated, etc. after earning it. That said, any chargebacks, offsets,  reductions, etc. that were known to the employee and part of his or her employment (btw, I am using "employee" and "employment" to include an agent relationship in this context) are typically enforceable, but only those known, agreed to conditions (even if the agreement was implicit, such as by voluntarily working while knowing of and subject to the conditions) will be enforced; the employer cannot unilaterally add additional conditions. Therefore, if 75% reduction was part of the terms of employment, that reduction is enforceable--but not a 100% reduction.


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