An Irvine Business Lawyer on Commissions

If you are paid on commission, there is a good chance you have, at some point, questioned the exact amount and propriety of the manner in which your earnings were calculated. Although there are different rules than for hourly wage employees, California law protects commission earners as well.

Initial Considerations

The fact that an employer refers to some form of compensation as a “commission” is not determinative. By law, a commission involves compensation where:

  • An employee sells a product or service, and
  • The earnings are a percentage of the product or service sold, and
  • The employee is not involved in making the product or rendering the service.

Requirement of a Written Agreement

Employees who are paid on a commission basis must be provided a writing that spells out the details of:

  • The manner in which commissions are calculated
  • When commissions are earned
  • When commissions are paid Outside Salesperson

An employee who is properly paid on a commission basis may be among the few California employees who are not entitled to overtime. California classifies as an “outside salesperson” an employee who spends more than 50 percent of his or her time out of the office; an outside salesperson is not entitled to overtime.

Final Commission

When an employee leaves employment, the general rule is that commissions owed may not be forfeited. If the commissions were earned under the terms of the written agreement, the employee is entitled to collect.

Contact an Irvine Business Attorney for Legal Advice

Determining what is owed an employee can be a complex matter under California wage laws. For any questions you may have, call Daily Aljian, LLP, an Irvine business lawyer, at 949-861-2524.

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