Unpaid Commission: Can it Be Recovered?

Most feel they have a solid understanding of overtime pay and whether or not they are receiving what they deserve, but when it comes to commissions, there seems to be additional confusion. What is unpaid commission and when is an employee able to recover unpaid commission?

What is Unpaid Commission?

Before we can define unpaid commission, it’s important to define commission wages in general. Commission wages are common in many industries, but prevalent in the computer and technology industries particularly. According to California wage law, commission wages refers to compensation that is paid as a percentage of the price of the product or service that is being sold. Commissions can also be based on the number of items sold. Disputes regarding commission wages and unpaid commissions are often resolved under the same legal principles as bonuses.

When are commissions “unpaid?” The easy answer is that commissions are classified as unpaid when they have been earned and never received. Technically the commission is earned by the employee who “procures cause” for the sale or other event resulting in commission pay. Disputes often arise when management intervenes during the sales process. When management is involved at some point during a sale, it is important to note the point at which someone procures cause for the sale and who was handling the customer at that point in time. This is the individual who has technically earned the agreed upon commission.

Obtaining Unpaid Commission:

If you feel you are entitled to commission that you never received, seek legal counsel. Employers frequently change compensation plans, utilize unfair provisions and/or adopt a very narrow interpretation of a commission agreement or plan. In some cases, employers are forced to seek unpaid commission post-employment. It’s important to note that employees who no longer work for a company can still be due commission on sales procured during their employment. Employers can’t reap the benefit of your efforts while simultaneously ignoring the agreement to provide you with a commission for those same efforts.

Employers will often work their compensation plans in various ways in order to justify commission forfeiture with little to no cause. Examples include employers who add verbiage making commission payment “exclusive” to current employees or allowing the employer to alter the commission agreement in certain situations, etc. California wage laws can help former and current employees recover commissions. The courts may see the commission agreement differently than your employer.

Call Blumenthal, Nordrehaug & Bhowmik today and find out how your unique circumstances can be taken into consideration when attempting to obtain unpaid commissions. 

Defining the Written Employee Contract

There are times when an employee is asked to sign a written employee contract. Before we can discuss when you should and should not consider agreeing to sign such a document, it’s important that we clearly agree on an exact definition.

What is a Written Employee Contract?

A written employee contract is a document provided (typically during the hiring process) to set forth terms of the relationship between the employer the employee. Both you and the employer sign the document. Entering into a written contract is not necessary with every position. Actually, use of the written employee contract is an exception to the normal practice during the hiring process – not the rule. But it is important to know what this particular type of document entails so that you can better understand when it might be appropriate or even possibly advantageous to agree to sign on the dotted line.

What is Included in a Written Employee Contract?

The written employee contract will clearly state the employee’s job description. It will also clearly state the agreed upon salary. In addition to this other items related to the employment relationship can be specified including: the length of the job (1 month, 2 years, indefinite, etc.), additional information regarding the employee’s responsibilities on the job, limitations on employee activity once the job is complete in order to avoid competition, protection of the company’s trade secrets/client lists, specified grounds for termination, additional benefits (vacation, disability leave, health benefits, etc.), ownership rights of employee’s work during the duration of the contract, methods agreed upon for resolution of any disputes arising as a result of the employment relationship, etc.

The written employee contract isn’t just one more piece of paperwork dragging the hiring process out. In some instances, it can be a vital element that protects both the employer and the employee from negative situations that could damage team morale, employer/employee relations, your ability to successfully complete the job at hand or your opportunity to fully enjoy the full extent of benefits that were promised during the hiring process.

Find out more about the advantages and disadvantages of signing a written employee contract in upcoming articles here on the Blumenthal, Nordrehaug & Bhowmik blog or get in touch today to talk to a legal expert on employment law. 

The Advantages of the Written Employee Contract

Many employees have never heard of the written employee contract. You might see it as an unnecessary annoyance mucking up the hiring process. Others have worked in fields or amongst employers who have utilized the written employee contract for all new employees.  They may see it merely as a formality observed almost ritualistically or there may be clear and obvious reasons that make it necessary. Today we’ll look at the actual advantages of signing a written employee contract.

What are the Benefits of a Written Employee Contract?

Entering into an employment contract during the hiring process is not always necessary. As mentioned in the previous article defining the written employee contract, it is actually an exception to the rule rather than a basic procedure required for every employee. But there are certain advantages that should be considered.

Employment Contracts are Useful if:          

1. You are a contractor or temporary hire handing a special project. The written employee contract can clearly specify terms of employment that can provide you with a written guarantee that you will have the opportunity to continue your work through project completion without fear of dedicating time, energy & expertise to an endeavor that will be handed off to someone else when the end is in sight.

2. You want to protect confidential and/or sensitive information regarding your business or business practices. Confidentiality clauses can be inserted into written employment contracts to protect trade secrets that the employee brings to the table. This can be important for employees who want to protect their life’s work while also joining in on group projects in their field.

3. You want job security. The written employment contract can offer job security and clearly agreed upon beneficial terms of employment.

4. You desire greater control over your employment status. Standards for performance can be clearly determined and agreed upon in writing – making it clear what is expected and what consequences/rewards will occur in response to given circumstances. The written employee contract removes the need to depend on promises from new employers. It is a written documentation of exactly why you agreed to take the job. 

Watch for the next article in the series outlining the disadvantages of signing a written employee agreement during your hiring process here on the Blumenthal, Nordrehaug & Bhowmik blog or call today to talk to an expert on the legalities of hiring and how to protect your company during the process. 

Severance and Release Agreements

Don’t Sign Anything Until You Have Talked to Us

If you are leaving a company and have an option to sign an employment contract such as a severance or release agreement, we have strong advice: don’t do it without consulting a lawyer first. Businesses use severance agreements to protect themselves in a variety of ways. The truth is they really don’t care that much about protecting the rights or futures of their employees. Often, release contracts are loaded with illegal and one-sided provisions designed to restrict employees’ rights on the job market, while paying employees as little as possible to ensure business interests are protected. In fact, many of these agreements are in violation of wage-and-hour laws.

Free Consultation ▪ Extensive Experience ▪ Maximum Compensation

The attorneys of Blumenthal, Nordrehaug & Bhowmik in La Jolla, California, have been representing employees in class action litigation against their former employers since 1999. We have an excellent record of protecting our clients’ rights and financial interests in matters relating to severance packages, release agreements and employment contracts.

Talk to one of our experienced employment law attorneys before you sign. Contact us today. We can help you understand what is included in the employment contract you’re signing and how it will affect your future. With our vast knowledge of employment laws and labor laws, your matter will be handled professionally and with great care.

We will examine your agreement and explain:

• Your capacity to seek work in your chosen profession
• Your final severance payout
• Tax consequences
• Independent contractor status
• Language about your performance on the job
• Your independent use of trademarks, copyrights and intellectual property

Can You Be Part of a Class Action Lawsuit?

In many cases, companies that ask employees to sign and accept illegal severance packages and separation agreements are following illegal policies. If you are the first plaintiff to step forward and start a class action lawsuit against your employer, you may be eligible to receive other compensation in addition to a settlement or jury award.

Don’t sign an employment contract or accept anything without knowing how it will affect your long-term prospects. Contact us to discuss the severance package you’ve been offered. Our lawyers represent employees in class action lawsuits against employers in Los Angeles, San Diego, Orange County, San Francisco and Santa Clara, and throughout California.