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The idea of earning a commission in addition to your wages can be very appealing. Unfortunately, many people who earn commissions do not fully understand the process, requirements, or their legal rights. This can lead to commissioned salespersons not getting the fair and legal treatment that they deserve.

At For All Workers, we help clients who work on commission understand and protect their legal rights. We want you to be informed so that you get the compensation you deserve.

Understanding Commission in California

While you may have heard an employer refer to commission as different types of payment, the legal definition of commission is earnings that are “based on a percentage of the price of goods or services” sold. Discretionary payments, such as holiday bonuses, are not commission.

If you are a commissioned salesperson, your employer is required to give you a written agreement detailing how your commission is calculated and will be paid. This may be called a “commission plan” or a “commission agreement”. You and your employer must sign the agreement in order for it to be enforceable. Your commission agreement should establish the following:

  • How commission is earned
  • Whether advances on commission will be issued
  • Meal and break policies
  • Compensation for work-related expenses
  • What happens to unpaid commissions in the event of job termination (by either party)

Under California law, your commission payment schedule may depend on the terms of your agreement, but your employer must pay you at least twice per month, including commissions (California Labor Code Section 204).

Your Rights as a Commissioned Salesperson

Commissioned workers are entitled to many of the same wage and employment law protections and benefits as hourly or salaried employees. This includes making at least minimum wage for each hour worked, as well as qualifying for overtime pay. Eligibility for overtime may depend on your classification as an “inside salesperson” or an “outside salesperson” (California Wage and Hour Law).

Generally, outside salespersons are not eligible for overtime pay. Certain positions in retail, technical, clerical, or mechanical industries may also not qualify for overtime pay if you earn at least half of your income from commissions and earn at least one-and-a-half times current minimum wage.

Have Questions about Commissions?

If you are a commissioned salesperson and are not getting paid per your agreement, or are being denied certain benefits you believe you are entitled to, it is advisable to contact an employment law attorney. At For All Workers, we can review your situation and your commission agreement, and help ensure that your rights are not being violated by your employer.

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