Earned commissions

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Earned commissions

I sell SAAS software and I’m leaving for another company. My commission is earned when a company pays their bill for the initial payment plus the first 3 months. I also get paid on deals that have paid their bill on their 6 month payment. My employer is saying that I’m not going to get paid on sales that haven’t paid their 6 month payments yet because I will not be here when those 6 month payments are paid. Should I be paid commission for the sales made for the previous six months that have not paid their 6 month payment?

Asked on April 2, 2019 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

There is no simple or always-right answer to your question. Unlike employee wages and salaries, which are regulated by law (like the Fair Labor Standards Act or FLSA), commissions are regulated by "contract"--by the agreement between the employer and employee, pursuant to which the employee worked and earned commissions. This agreement can be written or oral (unwritten; often incorrectly called verbal); it can be found in one document or in several places (e.g. in intraoffice memos, sales or employee handbooks, etc.); it can be explicit (spelled out in so many words) or implicit (found in the employer's policies and past practices). But in all events, the commission is governed by the understanding or agreement. 
If there is a written employment or commission agreement which addresses this issue, its terms will control.
If there is no single written agreement, but there are written policy statements addressing this point, look to them.
If there is no written agreement or policy, but there is a definitive oral agreement or understanding addressing commissions post-employment, follow that agreement.
If there is none of the above, look to what your employer has done in the past: have other employers been paid commissions after their employment ended? What was done in the past can show the employer's policy and the shape of its agreement with its employees.
If there is simply no guidance within your company, look to industry norms--what do other similar companies do? Generally, unless there is something to the contrary, a company can be held to do what its industry generally does.
If they don't want to pay you and you sue for the money, you'll have to use one or more of the sources above to prove your case--that in this circumstance, they should pay.


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