Shouldn't my final paycheck include my sales commissions?

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Question:

I am about to leave my job as sales representative for a California plastics company. Much of my compensation has been in the form of commissions. The company told me it won't include my commissions in my final paycheck -- I'll have to wait several months before I see the money. Can they do this?

Answer:

Many states have laws stating when employers must give final paychecks to their employees. Some of these laws specify whether commission sums must be included in these paychecks, but others don't.

California law requires employers to give resigning employees a paycheck immediately or within 72 hours if the employee did not provide at least 72 hours notice of quitting. That paycheck must include all "earned wages." The definition of earned wages includes commissions (Labor Code ยง 200).

But while the language of the law sounds awfully promising, there's a further twist, in the definition of "earned." Some companies say that commissions are "earned" when the employee makes the sale; other companies have successfully argued that the commission isn't "earned" until they get the money from the buyer. By the latter argument, the company wouldn't have to put any commissions in your final paycheck that hadn't arrived within their 72-hour window for paying you.

The upshot is that you must check your employment agreement with your company. If the agreement states that commissions aren't earned until the company gets the money from the buyer, you are pretty much stuck waiting for your commission check.

Readers in states other than California should contact their state labor department for more information about final paychecks and commissions.

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