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N Cal Atty
N Cal Atty, Attorney
Category: California Employment Law
Satisfied Customers: 9083
Experience:  Since 1983
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I was deducted $250,000 on my commissions due to bad product

Customer Question

I was deducted $250,000 on my commissions due to bad product , it took 148000 my original and then an additional 102000. my company is suing the supplier. Is this legal ?
Submitted: 1 year ago.
Category: California Employment Law
Expert:  N Cal Atty replied 1 year ago.
Thank you for your questions.
It is very probably illegal but it depends on the terms of your employment agreement, see
http://callaborlawblog.com/common-california-labor-code-violations/employer-deduct-paycheck/
which states:
"Deductions Against Commissions: Under California Labor law, commission is considered to be a wage, and as such no deductions can be made against commissions. However, in some cases, your employer may be allowed to make certain deductions. Consider the following examples.
If you receive both wages and sales commissions, your employer is allowed to make a chargeback against your commissions if those commissions were paid in advance and the sale later falls through. (e.g. merchandise returns). However, such deductions are possible only if you agree to them in writing. The “chargeback” deduction is lawful because “an advance commission by definition does not become a wage unless all conditions for performance have been satisfied.” Steinhebel v. Los Angeles Times Communications, 126 CA4th 696 (2005)
You can find your local Labor Commissioner Office through
http://www.dir.ca.gov/dlse/districtoffices.htm
I suggest calling the Labor Commissioner to go over the facts and get their opinion.
Also, you can get a free consultation from some of the employment attorneys listed by location at
http://lawyers.findlaw.com/lawyer/practicestate/employment-law-employee/California
My answer is that if the commissions were not paid in advance, the employer had no right to take them back.
I hope this information is helpful.

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