When a salesperson is abruptly let go, one of the first questions that usually arises is whether the employer will pay out future commission payments. This is a complicated question, and involves a lot of variables. First, you should understand that, according to Labor Code Sections 201, 202, all wages, including commission wages, are due immediately upon termination, or within 72 hours of resignation. There are significant penalties if the employer fails to comply with this rule.
However, what if the commissions can’t be fully calculated because payment has not yet been received from the customer? Here, the law is clear that once payment is received, and the commission can be calculated, then payment is due immediately. According to Labor Code Section 203, if payment is not made immediately, then a penalty of the employee’s daily rate of pay accumulates for a period of 30 days.
Finally, commission plans are often complicated. That is, it’s not always clear when a “sale” has been fully made. There are situations where at the time of termination the employee has done most of the work involved in making the sale, but there are additional duties that need to be performed to close the deal completely. In this case, an employee who is terminated without good cause can claim a legitimate right to the full commission, because he or she was prevented from completing the deal. However, if the employee quits before the transaction is completely done, his or her rights are much more unclear, and there may be no right to recovery at all.
In the law of sales contracts, it is often stated that, “He who shakes the tree is entitled to gather the fruit.” This concept applies to most commission sales contracts, so do not let your former employer take advantage of you if your employment comes to an end. It is important to consult with an employment lawyer so you understand your rights.
Carlin and Buchsbaum are employee rights lawyers in Long Beach, California. Our workers compensation lawyers specialize in employment law and making sure you are paid what you are due after a wrongful termination. Please contact your Carlin & Buchsbaum Long Beach workers compensation attorney with any questions.