Commissions are often what makes a sales position or a job as a broker profitable. In addition to a base salary, professionals may receive a percentage of their total sales, a flat fee per sale or a variable amount based on a tiered system. The harder a professional works, the more they can earn for their efforts. Commission payments are often an important supplement to base wages, which may be relatively low.
In scenarios where professionals have accepted new positions elsewhere, they may wonder if their employers have a legal obligation to pay them commissions for that interim time. What does the law generally say about commission payments for workers no longer employed by a business?
State law protects professionals
The Fair Labor Standards Act (FLSA), a key federal wage law, does not guarantee the right to commission payments in most cases. Thankfully, California state law addresses that gap in legal protection.
The contract that a sales professional or mortgage broker has with their employer typically outlines their right to commission payments. Their employer has an obligation to uphold those terms. The one exception to that rule is when the contract includes a forfeiture provision. In such cases, those no longer employed by a company may lose the right to receive commission payments.
The timing of when a professional earns a commission and the language included in their employment contract both influence whether or not their employer has a legal obligation to pay commissions at the end of their employment. Reviewing contracts and other important documentation with an employment law attorney can help frustrated professionals determine if employers may have violated their wage rights and California state statutes accordingly.