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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 11271
Experience:  Significant experience in all areas of employment law.
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Does an employee who is going on maternity leave still earn

Customer Question

Does an employee who is going on maternity leave still earn commission when they are not working? We pay commissions at the end of the month for commissions earned in the prior month. We are in the state of California.
Submitted: 4 years ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 4 years ago.
Hello and thank you for entrusting me to answer your question.

The reason why you have had trouble finding a clear-cut answer to this question is because the answer depends entirely upon the wording of the particular employment contract, and if no employment contract exists, upon the common understanding between employer and employee.

It may sound obvious, but a commission is entitled whenever an employee has completed all acts that contractually entitle her to the commission.

Absent an agreement to the contrary, a commission is generally regarded as "earned" when an employee has completed all actions reasonably necessary to secure the commission. So, absent an employment contract stating to the contrary or a common understanding between employer and employee, this default understanding would likely govern commission entitlement.

Certain equitable principals, such as "unconscionability" can also serve to limit an employer's' ability to restrict commission entitlements. For example, see American Software Inc. v. Ali here: http://law.justia.com/cases/california/caapp4th/46/1386.html

So to summarize, there is no definitive answer to this question because it is a matter of contract. Whatever the contract requires for commissions to be paid will govern, and if there is no contract or clear employment policy governing this issue, then commissions will generally be considered "earned" when an employee has completed all actions reasonably necessary to secure the commission.

I sincerely hope that this information helps you and I wish you the best.

My absolute greatest concern is that you are satisfied with the answer I provide, so please do not hesitate to contact me with follow-up questions. Also, please bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.
Customer: replied 4 years ago.
So if they are on maternity leave and did nothing to "earn" commissions after their maternity leave date, we are not required to pay commissions?
Expert:  Patrick, Esq. replied 4 years ago.
Absent an agrement to the contrary, that would typically be the case.

For example, if an employee sells cars and they go on leave for one month and sell no cars, they would not be entitled to any commissions on the cars sold by other employees during that month unless there was a specific agreement in place that entitled every employee to a percentage of ALL company sales as commission.

Again, my number one goal is that you are satisfied with my answer. If you still require further clarification, I am happy to continue assisting you.
Customer: replied 4 years ago.
So if they have a territory with say 100 accounts, and the customers continue to send in orders even when they are not there are we required to pay commissions?
Expert:  Patrick, Esq. replied 4 years ago.
Absent an agreement between employer and employee that specifically addresses this issue, it would typically be a question of fact as to whether the employee on leave had completed all actions reasonably necessary to secure these commissions prior to her departure.

For instance, if these new orders were essentially recurring orders from existing clients that the absent employee had secured, she would likely be entitled to commissions on those orders because she had already done everything reasonably necessary to generate the new orders and, thus, her commissions.

However, if these new orders were the product of significant additional work from other employees, she likely would not be entitled to the commissions because she had not done everything reasonably necessary to generate those orders.

As you can see, it comes down to a "question of fact" as to whether these new orders were the fruit of the absent employee's work or not.

I do hope that this helps clarify.

Kindest regards.

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