Unpaid Commissions: What California Law Says About Getting the Money You Earned

Introduction

If you’re working in California and earning commissions, you have the right to be paid fully and on time. Whether you’re in sales, marketing, or any job where your earnings depend on performance, commissions aren’t a bonus or gift—they’re legally owed wages under California law.

Unfortunately, unpaid or delayed commission payments are a common issue. Some employers withhold commissions unfairly, change the rules midstream, or terminate employees before paying them out. In this article, we’ll explain your rights, what California law says, and what steps you can take to recover unpaid commissions legally and efficiently.

What Are Commissions Under California Law?

California Labor Code §204.1 defines a commission as compensation paid based on a percentage of the sale of goods or services.

These include:

• Real estate commissions

• Car sales bonuses

• Software or SaaS sales commissions

• Insurance agent commissions

• Finder’s fees in certain industries

What’s not a commission? Bonuses that are discretionary, referral payments not tied to sales, or hourly wages.

If your pay is tied directly to a sale, and that sale is completed, you are entitled to receive your commission as wages.

What Must Be in a Commission Agreement?

Since 2013, California requires written commission agreements for all employees paid wholly or partly by commission.

That agreement must include:

• How the commission is calculated

• When the commission is earned

• When and how it will be paid

• A signed acknowledgment by the employee

If no written agreement exists, the court or Labor Commissioner will often interpret the law in the employee’s favor.

When Are Commissions “Earned”?

This is where most disputes begin.

Commissions are earned based on the terms of your agreement—but generally, once a sale is complete and all necessary conditions have been met, you are legally entitled to payment.

Some employers try to delay payment until:

• The client pays in full

• The return window closes

• A service is completed months later

That’s legal only if the agreement says so. Otherwise, withholding payment is a violation of California’s wage laws.

Final Paychecks Must Include Earned Commissions

If you’re terminated or quit, your final paycheck must include all earned commissions, regardless of the pay schedule.

This means:

• Fired? Commissions must be paid immediately.

• Quit with notice? Payment is due on your last day.

• Quit without notice? Payment is due within 72 hours.

Failure to include these commissions could trigger waiting time penalties under California Labor Code §203—up to 30 days of additional wages.

Common Violations by Employers

• Delaying commissions beyond the agreed-upon timeline

• Rewriting commission plans mid-employment

• Terminating employees before payout

• Failing to pay commissions post-termination

• Not providing a written commission agreement

If any of these apply to you, you may have a strong legal claim for unpaid wages.

Your Rights Under the Law

California treats commissions as wages. That means:

• You can file a wage claim with the California Labor Commissioner.

• You can seek waiting time penalties for delayed payments.

• You may recover attorney’s fees if you win your claim.

• If the failure to pay commissions was intentional, you may even pursue punitive damages through a civil lawsuit.

How to Recover Unpaid Commissions

1. Gather All Documentation

• Your written commission agreement (if available)

• Sales records, performance reports, or CRM screenshots

• Pay stubs and payroll history

• Emails, texts, or memos related to your commission structure

2. Speak to HR or Your Supervisor

Sometimes, a conversation is all it takes. Be professional, cite the terms of your agreement, and ask for clarification or payment in writing.

3. Send a Demand Letter

If your employer still refuses to pay, send a formal demand letter. This is a strong signal that you are prepared to take legal action.

4. File a Claim

If there’s no resolution, you have options:

• Wage Claim: For most claims under $10,000, file with the California Labor Commissioner’s Office.

• Civil Lawsuit: For complex claims or amounts above $10,000, consider hiring an employment attorney.

At 1000Attorneys.com, we help California workers get connected with qualified employment lawyers who specialize in unpaid wage and commission disputes.

Can Independent Contractors Sue for Unpaid Commissions?

Yes—but the approach is different.

If you’re a true independent contractor, your unpaid commissions are typically a contract law issue, not an employment one.

You may still file a lawsuit for breach of contract, but you won’t have access to Labor Commissioner remedies unless you were misclassified as a contractor instead of an employee—another common issue in California.

Tips for Preventing Future Issues

• Always get your commission plan in writing.

• Ask questions about when commissions are earned vs. paid.

• Keep detailed sales records and communications.

• Know your rights—California law is on your side.

Final Thoughts

If you earned a commission in California, you deserve to be paid—period. Your employer can’t arbitrarily change the terms, delay payment, or deny what you’re owed.

Whether you’re still on the job or recently terminated, don’t wait. Document everything, request what you’re owed in writing, and take the next step if needed.

Need help recovering unpaid commissions? Visit 1000Attorneys.com to be connected with a California employment attorney who will review your case and help you get the compensation you’ve rightfully earned.