Can an employer hold back 50% of commissions until the end of the year and then not pay if you resign before the end of the year?

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Can an employer hold back 50% of commissions until the end of the year and then not pay if you resign before the end of the year?

I had a sales position at my old company and their FY was same as calendar year. I was earning a base + commissions. I resigned in 11/10 to work for a different company (worked full 3 quartersplus 1 month of 2010). They held back 50% of earned commissions on the 1st 3 quarters in case the 4th quarter was a bust. This held back money was to be paid back at the end of the year assuming sales were to the point where it could still be paid. Seeing as I resigned before getting the 4th quarter check, I was told I forfeited the commissions I earned in the first 3 quarters. Is that legal?

Asked on December 13, 2010 under Employment Labor Law, California

Answers:

Aryeh Leichter / Leichter Law Firm

Answered 10 years ago | Contributor

As a general rule, the right of a salesperson to a commission depends on the terms of the contract he or she entered into with the employer.   For example, where a plan establishes a condition precedent that must be satisfied before commissions are earned and payable, those conditions ordinarily will be enforced.  Thus, an employee will not be owed the commission if fails to satisfy the conditions.

Please give me a call (213-381-6557) or send me an email ([email protected]) if you would like to discuss your particular circumstances.

All the best,

Ari Leichter


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