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Can California Employers Withhold Earned Bonuses And Commissions?

Can Unpaid Commissions And Bonuses Be Grounds For A California Employment Claim?

Many businesses use commissions and bonuses to encourage their employees to perform at their best. Performance-based bonuses are a standard tool for those in sales and management jobs. In addition, when employees achieve specified objectives, the corporation may agree to provide them with additional income.


Qualifying for a bonus can be an incredible drive to give your job your all, whether you need to sell a certain number of units in a given week or have to satisfy specific corporate requirements for sales when compared to staffing hours. Bonuses and commissions are even factored into some employees' monthly budgets.


What happens if your boss fails to deliver on their promise of a commission or bonus?


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What Are Commissions In California Employment Law?

Commissions are earnings (a type of compensation) paid to "any person for services rendered in the sale of such employer's property or services and based proportionately on the value," according to California's Section 204.1.


This law is expanded upon in Section 2751. The following are not defined as commissions:

  • When retail staff receive short-term bonuses

  • Payments made due to temporary incentive payments that raise the amount paid under a stated contract

  • Bonuses and profit-sharing schemes (unless an employer offers to "pay a defined percentage of sales or profits" as a form of compensation)

Consider consulting a Los Angeles employment lawyer for more clarity on the legal side of things. Your commission dispute will depend on various factors, so getting legal advice might be the best way to get specific answers.


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Important Factor #1: Bonuses And Commissions Written in Contract

Bonuses are sometimes an intrinsic component of a company's compensation structure, which means the company's incentive system may be spelt out in the employment contract you signed when you first started the work or accepted a promotion.


Companies may also add bonuses to incentivize compliance with new initiatives or boost employee morale and, as a result, sales. Although you can theoretically file a claim against your company for an unpaid bonus promised verbally, having a written record of the bonus agreement makes it much easier to prove your claim for an unpaid bonus.

Your Los Angeles employment lawyer will also need all the evidence they can find, give them all the information you can.


Important Factor #2: The Facts Of The Case

An underpaid bonus is a clear example of a wage breach in some situations because the bonus is part of the intrinsic compensation structure that an employee agreed to when they were hired. An unpaid bonus may also result from a contractual default rather than a specific salary issue.


Reviewing your employment contract, compensation documentation, and other vital documents linked to your job will help you and any legal professional you work with understand how to approach the issue and agree with your employer.

If you cannot fix the matter through direct negotiations, you may be forced to go to court and ask a judge to intervene in your unpaid bonus employment law dispute.

Should You File A Commission Dispute In California?

Any disagreement between an employer and an employee about the remuneration owed for completed work is referred to as a commission conflict. This frequently involves monetary bonuses or commissions from selling a product or service.


Commission disputes are common after a layoff, resignation, or termination, and they can be lengthy and acrimonious. In many cases, these conflicts arise as a result of circumstances. While most employees want and expect to be paid for their work by their employers, it is crucial to understand that earned commissions are paid on a different schedule.


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When it comes to receiving paid earned commissions after a termination, things may get complicated quickly, resulting in a lot of friction between employees and their employers. Commission agreements, written contracts, and state wage requirements must be considered and followed.

Even if an employee is fired, the company is still obligated to compensate them for their labor. The company is under no obligation to pay its former employee. The company is responsible for paying the employee's weekly salary, hourly rate, vacation compensation, and commissions.


If your former employer is harassing you about unpaid commissions, you should get legal advice from a Los Angeles employment lawyer.


Sales Commission Disputes


A salesperson expects to be paid twice a month for their commission. For example, if a real estate salesperson sells a home, they may receive thousands of dollars once the transaction is completed. While most commissions will be paid on time and following the agreement, there are times when payment conflicts emerge. Arguments about sales commissions make it more difficult for salespeople to make a living.


If you're having trouble getting your sales commission, don't hesitate to contact an Employment Lawyer in Los Angeles.


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