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Unpaid commissions are a very common type of wage claim in California. Employees who earn commissions but are never paid for them may usually recover the commissions earned in a wage claim. However, California law distinguishes between the many types of commissions, and some “commissions” are not considered wages that can be recovered in a wage claim.

Contact a wage claim lawyer for help if you are interested in pursuing an unpaid commissions wage claim.

Commissions are Wages

In California, commissions are “wages.” That means you can bring a wage claim in court or with the Labor Commissioner to collect unpaid commissions.

The term “commission wages” has been defined in the case of Keyes Motors, Inc. v. DLSE (1988) 197 Cal.App.3d 557; 242 Cal.Rptr. 873, which held that commissions arise from the sale of a product, not the making of a product or the rendering of a service. The court further held that in order to be a commission, the comp ensation m ust be a percentage of the price of the product or service which is sold.

What is Not Considered a Commission Wage

A plan which simply relies upon a “percentage” of some sum such as the cost of the goods sold or the services rendered by an establishment does not constitute a “commission wage”; the worker receiving the commission must be principally involved in selling the goods or the services upon which the commission is measured.

“Tech commissions” earned by auto mechanics and technicians are not considered commissions. Instead, auto mechanics and technicians must usually be paid an hourly rate.

Commission Computation

Commission computation is based upon the contract between the employer and the employee. The commission may be based on either gross sales figures or net sales figures. As discussed below, certain criteria cannot be considered when reaching the “net” sales figures. If the element upon which the deduction from the gross sales is based is predicated up on a cost which is attributable to the employer’s cost of doing business, the element may not be used.

Payment Of Commissions Upon Termination Of Employment

A commission is “earned” when the employee has perfected the right to payment; that is, when all of the legal conditions precedent have been met. The provisions of any contract notwithstanding, California courts will not enforce unlawful or unconscionable terms and will construe any ambiguities against the person who wrote the contract (usually the employer) to avoid a forfeiture.

6 comments

  1. Confidential

    I never received my commissions for the last month I worked. How do I collect?

    1. Every commissions contract is different. That means that we would have to review your specific contract to determine whether you are indeed entitled to be paid for your last month of commission. Give us a call for a free case evaluation.

  2. Confidential

    I resigned from my job nearly two weeks ago and have still not been paid out all the back log of commissions owed to me. In addition to the unpaid commission, the company also did not accurately reimburse me for mileage and gas which meant I was consistently using my earnings to pay for company related expenses. I have been back and forth for two weeks with the corporate office and my local branch to get my commission paid out and at this point have not been provided with the information I need. Can I be assisted in this matter, and what do I do?

    1. Unfortunately, your situation is rather common. I don’t know why employers think they can get away without paying employees all of their earned commissions. Also, it is common knowledge that employees have to be reimbursed for their business-related mileage, and the failure to do so can lead to liability. As for commissions, every commission plan is different. That means that your claim for commissions is dependent on the exact language of your commission plan. It is possible that your plan has a forfeiture clause. Forfeiture clauses can be legal in California. But, again, every plan is different and we would have to look at the exact language of your commission plan. Why don’t you give us a call, and we can go over your commission plan and potential claim for unreimbursed mileage? Our consultation will be free, and we can have it over phone or by Zoom.

  3. My contract states what was to be paid out I have 3 years of proof on paper of wasn’t payed out. I am a licensed Termite inspector and General Pest Control Field representative.

    1. We would be happy to review your documentation and to evaluate your claim for unpaid commissions. Please give us a call at 805 641 6600.

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