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Joseph
Joseph, Lawyer
Category: California Employment Law
Satisfied Customers: 5043
Experience:  Extensive experience representing employees and management
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I am a commissioned and salaried California employee for a

Customer Question

I am a commissioned and salaried California employee for a Colorado based company that has several hundred employees in the State of California and thousands of employees worldwide. My employer pays me commissions based on sales accomplished. But they pay two months after the sale and the commission is based on booked revenue. So, if I close a sale end of December, they do not pay until mid February.

They have recently been changing my quota the month they are supposed to pay commissions (which means they change my quota 1.5 months after my commissionable sale and retroactively apply it to 1.5 months prior for that specific month) before they pay out. So for December they have changed my quota such that I earn considerably less for sales closed in December but I dont know about the changes till 3 days before commission is supposed to be paid in February. They enforce this quota increase by making us sign a new addendum to our comp statement and stating that if we don't sign it we will not get paid. Is this legal?

They also have not provided a reason for the quota change. Are they required to provide one?

I read somewhere that commission is supposed to be paid in the month earned. I also read that retroactive application is illegal? But is this true if the commission has not been paid yet? Or is that only if the commission was paid and then they do a retroactive clawback?

Is it legal for them to withhold commission compensation because I don't sign this ammendment for a sale that was one to two months prior?

I feel like this is shady changing my quota to pay less without letting me know atleast the month of that my quota may go up, or that a sale was unforcasted etc. They are refusing to give me a reason but forcing me to accept the new quota.
Submitted: 2 years ago.
Category: California Employment Law
Expert:  Joseph replied 2 years ago.
Hello.

Your employer cannot withhold wages (including commissions) that you have already earned, and your employer cannot require you to sign an addendum to your compensation agreement in order for you to receive your earned commissions.

Unfortunately, as an at-will employee, your employer is not required to inform you of the reason for the quota change.

Changing the amount of your commissions retroactively is illegal, since it would constitute an illegal deduction from your earned wages.

It isn't legal for them to withhold any commission compensation because you refuse to sign an amendment to a sale.

I recommend that you file a wage claim with the Department of Industrial Relations for the amount in unpaid wages. I would also suggest that you inform them of your employer's illegal business practices, including threatening to withhold wages until you sign an amendment to prior completed sales.

You can file a claim using the forms available here:

https://www.dir.ca.gov/dlse/HowToFileWageClaim.htm
Joseph, Lawyer
Satisfied Customers: 5043
Experience: Extensive experience representing employees and management
Joseph and other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.
Thank you for the response. For clarification, the amendment is to our commission statement. They structure the comp plan such that there is a "Schedule A" that shows Quotas and percentage of max payouts. It is this that they change the quota and require us to agree to in order to get paid for the prior sale. I have had other employers threaten to not pay commissions if we did not sign the core comp plan stating if we did not agree to the terms that we have chosen not to participate. Can my current employer take this stance with the new "Schedule A" (which is the amendment that I was referring to?). It sounds like they potentially cannot in this specific instance where the sale was made in the past. However they have a clause that in their non-negotiable commission plan that all commissionable employees sign that states they can alter the quota as necessary for any reason. They just don't state that they can do this retroactively. Is there a loophole where if they have not told me what the total value of the commission due for December in a commission statement that they can change the quota anytime before they send the commission statement (which is 3 days before payment).
Expert:  Joseph replied 2 years ago.
No, they cannot take that stance in relation to commissions that have already been earned under the previous quota.

The company is not allowed to change the commissions retroactively merely because there is a clause in the contract that states that it can alter the quota as necessary.

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