Commission pay in California has very specific rules. If you work in a position where there are commission incentives, it is important you understand the basics about California commission regulations so you can make sure that you are being paid all that you are owed.
Effective January 1, 2013, California Labor Code section 2751 requires employers to provide written commission plan agreements to all employees who perform services in California and whose compensation involves commissions. The agreement must explain the method by which the commissions shall be computed and paid. The commission plan must also be signed by the employer and the employer must obtain a signed receipt from each employee. Failure to provide a written agreement regarding commission pay is illegal.
The new law incorporates the definition of commissions from California Labor Code section 204.1, which defines commission wages as “compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.”
Once the parties enter into the agreement and the employee fulfills the appropriate conditions, the employer must pay the commission. On the other hand, discretionary bonuses cannot be enforced in court. The classic examples are Christmas bonuses. In these circumstances, the employer has made no promise to the employees and has no criteria for setting these bonuses. Rather, the employer assesses the employee’s performance after the work has been performed and decides if and how to compensate the employee. Simply put, if there is no mandatory obligation to pay the commission, then the commission cannot be enforced in court. At Righetti • Glugoski, P.C., our lawyers are trained to look for that obligation in the company’s papers and the circumstances of the case.
Please contact our firm and have an immediate, complimentary and private consultation with one of our skilled attorneys to discuss your commission pay. You may call us at 415-983-0900 or 800-447-5549 to get started.