If I recently left a company but now it is claiming that I owe them money because I did not sell enough to cover the draw plan I was on, what are my rights?

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If I recently left a company but now it is claiming that I owe them money because I did not sell enough to cover the draw plan I was on, what are my rights?

I was never told what kind of draw plan (recoverable vs non-recoverable) I was on and was not aware that if I left the company I would have to pay the money back. I also never signed anythig when my comp plan changed from base plus commission to a draw plan. Am I legally going to have to pay this money back?

Asked on March 28, 2012 under Employment Labor Law, Idaho

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

A draw is an advance against commission (basically a loan)--the amount drawn must be covered by (or if you prefer, repaid by) commissions earned on sales. If  not, then the amount not covered or repaid by commission remains a loan which you must repay. (Note: while a company could  choose to have a draw plan which is not recoverable, since the normal or typical draw is recoverable, unless the agreement was specifically that it was a nonrecoverable draw, you most likely have to repay it to the extent it was not earned out.)

It doesn't matter whether you signed anything: an agreement can be oral, and/or can be shown by conduct (e.g. if you participated in the draw plan, that shows your agreement to it).

Therefore, from what you write, to the extent your commissions on sales did not match or exceed the amount you received as a draw, you would seem to have to repay that portion of the draw not covered by commission. This a general answer, based on general principals; for a definitive answer based on the specifics of your situation, you would need to consult in detail with an employment law attorney.


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