Whether it is all of your salary or part of it, as a commission receiving employee, you are entitled to the payment of such wages. As New York wage and hour violation attorneys, we know how detrimental it can be for an employee when an employer fails to pay commission. If you believe you have been cheated out of commission that is rightfully yours, Brown Kwon & Lam can help.
What is Commission?
The Muse defines commission as, “additional compensation that’s earned based on job performance.” Often a commission-based role is created via an employee contract and includes the terms you will be paid a set amount of money, often dependent on hitting employment goals like the amount of product sold, clients booked, etc.
While it depends on the company, the commission may be paid out monthly, quarterly, or yearly.
What New York laws exist defining requirements for commissions paid?
New York State Labor Law Article 6 establishes the requirements for the payment of wages to commission-earning employees. Under the law, a commissioned employee is one whose “principal activity includes sales and who is paid, in whole or part, on a commission basis.” This does not include those in supervisory, managerial, executive, or administrative roles.
In order for the commissioned role to be recognized, the Labor Law requires that the agreement of payment must be in writing and signed by both the employee and employer. The written agreement must include:
- Description of how wages, salary, drawing accounts, commissions, and all other forms of payment earned will be calculated;
- When the employee will be paid;
- How often reconciliation will occur (if applicable); and
- Any other relevant details of payment of wages, salary, drawing accounts, commissions, etc. when the employment ends.
While instructions like this make it seem as though employers should have no issues paying New York employees their earned commissions, the reality is that issues still exist in the workplace.
When Employers Fail to Pay Commission Earned
Though limited deductions may be taken from commissions earned under Section 193 of the Labor Law, it is important for commission earning employees to pay close attention to the details of their employment contract to ensure that they are not being subjected to deductions that they should not be.
Remember, any commissions earned by you must be given to you, even if the employment relationship ended via termination or choosing to seek a new position. However, the language within your contract will determine if the commissions have been earned yet.
For example, if you were in the process of closing on a new client, but were terminated before the deal was closed, you would not receive any commissions for that client, even if the company were to secure their business.
But the language of your contract can become laden with complicated jargon that makes it difficult to know what is rightfully yours.
In addition, there are other forms of commission withholding you need to be mindful of:
- Draw Against Commissions: A draw against commission is a payment that is credited, in whole or in part, against future commissions. These typically function as an advance. A draw can only be reconciled against future commissions; should an employee leave the company, he or she cannot be required to repay this. Recoupment is illegal unless explicitly included in the employment contract.
- Minimum Wage and Overtime: New York State minimum wage and overtime laws apply to commissioned salespersons; outside salespeople are exempted from minimum wage and overtime requirements. An employee can be both a commission salesperson and an outside salesperson depending on the employment agreement.
- Bonus: Any monies given to an employee given at the discretion of the employer is considered a bonus. Money given for job duties performed is commissions.
What happens if my employer does not pay me my commission?
If your employer fails to pay you your commission or follow the regulations set forth under Section 191-C, Payment of sales commission, the employer is liable in a civil action for double the damages incurred. You may also be able to recover reasonable attorney’s fees, court costs, and disbursements.
These cases can be difficult; that doesn’t mean your rightfully earned commission should stay in the hands of your employer.
Failure to Pay Commissions: Brown Kwon & Lam
If you are or were previously a commissioned employee for an employer in New York State, know that you have a right to your money earned for sales. If you believe you have a claim, contact the commission attorneys of Brown Kwon & Lam today. We will review your contract and bring about a lawsuit for unpaid wages. Call Brown Kwon & Lam today.