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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 6758
Experience:  Significant experience in all areas of employment law.
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Is it legal in Ca for an employer to hold your paycheck

Resolved Question:

Is it legal in California for an employer to hold your paycheck for 90 days after you quit? I worked on 100 percent commission and was paid three times a month and gave one day notice (not a business day). Draw against commission checks on the 15th and the 30th and a commission check on the 25th. I quit December 22 of last month. My last check was a draw check on the 15th of December. I just called my ex employers office and the lady who writes the checks said that my boss has 90 days to pay me. And that when she previously quit it took her 90 days to get paid too. (she started working for the company again). The company is small and there is no one above my boss (owner)

Submitted: 1 year ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 1 year ago.
Hello and thank you for entrusting me to answer your question.

What you describe is absolutely illegal. An employee is entitled to payment of his or her final wages within 72 hours of giving their notice of intent to quit or immediately upon the employee's separation of employment, whichever date is later. (Labor Code 201) Failure to pay a departing employee's final wages consistent with Labor Code 201 will typically result in the assessment of a penalty in the amount of the employee's daily rate of pay for each day the wages go unpaid up to 30 days. (Labor Code 203)

So for example, if an employee who makes $100 a day and quits with at least 72 hour's notice with his last day being November 1st, and isn't paid until the 20th, that employee would be entitled to $2,000 in penalty assessments on top of the wages actually owed.

The best way to deal with violations of Labor Code 201 is to file a wage claim with the Department of Labor Standards Enforcement. The DLSE takes such claims very seriously and will initiate an instigation. To file a wage claim with the DLSE, visit this link: http://www.dir.ca.gov/dlse/howtofilewageclaim.htm

Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

If you do not require any further assistance, I would be most grateful if you would remember to provide my service a positive rating, as this is the only way I will receive credit for assisting you.

Finally, please bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.

Very best wishes and happy holidays to you.
Customer: replied 1 year ago.

But does the law apply to employees who are paid 100% commission rather than regular wages? Also I didn't leave a 72 hour notice. I quit saturday the 22nd and said I would not be returning to work that monday the 23rd. (its a m-f workday) Lastly, she has been paying per the contract our commission checks on the 25th of the following month, whether the customer has paid for that order or not. She deducts pay after 90 days if the customers invoice is still unpaid. So my fear would be that she if I told her to pay me right now for Decembers orders she would out of retaliation only pay for orders/invoices that have received payment at this point. Please reply. thank you.

Expert:  Patrick, Esq. replied 1 year ago.

Emily,

Thank you very much for your reply.

The Labor Code specifically defines "wages" to include commissions, and Labor Code section 201 and 203 apply to employees who work solely on a commission basis.

One wrinkle to this analysis for commission employees is that an employer is typically free to determine when a commission "vests" for the purpose of it becoming a wage. Most often, employers will require that they actually receive payment from a customer on a sale before the commission vests and the employee is entitled to payment. The rationale for this is that if the customer does not pay, the employer should not be made to pay the employee commission on a sale that never really went through.

There need not be a written agreement to the effect that commissions only vest once payment is received--if it is the employer's general practice not to pay commissions until payment has been received, that is generally sufficient to delay the employer's legal obligation to pay commissions until that time. It is important to note that this means that you'd still be entitled to the commissions and still be entitled to a penalty assessment pursuant to section 203, but just not until the payment is received.

The other wrinkle is that if other employees had to step in and complete a substantial amount of work for the sales to go through following your departure, an individual in your circumstance may not be entitled to the commissions because they weren't "earned" by you.

Courts determine whether a commission was "earned" by a particular employee by examining whether that employee was the "procuring cause" of the sale.

In Brea v. McGlashan, 3 Cal. App. 2d 454 [39 P.2d 877], the court, in determining whether a finding that the plaintiff was the procuring cause of obtaining certain advertising contracts was sustained by the evidence, said: "The word 'procure' does not necessarily imply the formal consummation of an agreement. ... In its broadest sense, the word means to prevail upon, induce or persuade a person to do something. ... The originating cause, which ultimately led to the conclusion of the transaction, is held to be the procuring cause."

Assuming that you were the procuring cause of the sales on which you now claim commissions, and assuming that it is not your employer's general practice to pay commissions until payment is received, you would be entitled to these commissions as "wages earned" starting 72 hours after you quit, since you didn't give advance notice, and penalty assessments for the non-payment of these commissions would begin accruing at that point in time.

If you were not the procuring cause, you would not be entitled to the commissions, and if your former company has not yet been paid on the sales and their practice was to refrain from paying commissiosn until that time, you would be entitled to the commissions upon receipt of payment by your former company.

Again, I sincerely XXXXX XXXXX this information helps you and I wish you the best. If I have answered your question, I would be very grateful for a positive rating of my service so that I may receive credit for assisting you.

Kindest regards.

Patrick, Esq., Lawyer
Satisfied Customers: 6758
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and 2 other California Employment Law Specialists are ready to help you

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