Employers offer bonuses and commissions to motivate employees and maximize a company’s profits. And workers in Los Angeles are eager for the chance to earn extra income in a city that’s notoriously expensive to live in. A bonus or commission payments can improve your quality of life, help you pay off debts, move to a better home, and other dreams you have for yourself and your loved ones.
What happens, though, if you do not receive a bonus or commissions that you rightfully earned? Sadly, there are many employers that push their workers to the limit, then go back on their word to reward them. In these situations, you may have grounds to file an employment rights violation claim and recover the funds you deserve.
Commissions as Defined by California Law
According to the California Labor Code Section 204.1, commissions are a form of compensation that’s equivalent to a percentage of the item or service’s sale price. Employers are required to pay commissions twice every month on a regular pay day, meaning the amount is included in a standard paycheck.
Commissions are not the same as bonuses, considering that they result from a direct sale as opposed to meeting certain performance metrics. Under Labor Code Sections 2751, employees must be provided with a written contract that details how commissions are earned, calculated, and paid. If there are any changes to the commission structure, a new contract must be issued and signed by the both the employer and employee.
Non-Commission Payments from Sales
Certain types of sales-related earnings are not commissions. This includes compensation from profit-sharing plans, incentive payments to new workers, and short-term productivity bonuses. Because these payments do not meet the legal requirements of how commissions are defined in California, they do not have to be paid according to the rules in Section 2751. If the payments do fall under the regulations in Section 2751, the payment structure applies to both exempt and non-exempt employees.
What Happens to my Commissions if I Lose My Job?
If you were fired or laid off, you are still entitled to all your wages, which includes commissions. California’s Labor Code Section 201(a) requires employers to pay earned commissions at the point of termination. However, the calculation of commissions can be quite complicated, so it’s reasonable to give the employer a certain amount of time to make good on these payments. For example, if you give notice that you are quitting with at least 72 hours’ notice, commissions must be paid on your last day of work. If you quit without giving notice, you must give your employer 72 hours to calculate and pay the commissions you earned.
What is a Bonus?
Now, let’s look at what constitutes a bonus as opposed to earnings from commissions. Bonuses in California are classified as discretionary or non-discretionary. Non-discretionary bonuses are solely at the employer’s choosing, like extra money that’s given as a “thank you” to employees during the winter holiday. You do not have to do anything to earn this money, nor if your employer obligated to award the bonus, which is completely at their discretion.
On the other hand, a non-discretionary bonus is based on quantifiable performance metrics, like meeting a certain sales goal for the year. Most bonuses paid to California workers are included in the regular rate of pay, but sometimes, it may be calculated according to the overtime rate of 1.5 or 2 times the worker’s regular rate.
Keep in mind that if you have a commission-only job, it’s likely that you are exempt from overtime pay. In order to classify as a commissioned employee, over 50% of your wages are from commissions, and you must earn at least 1.5 times the minimum wage. This would mean that you are exempt from overtime pay, but your eligibility may change from one pay cycle to another, depending on the source of your earnings.
Bonuses must be paid in accordance with the rules under Labor Code Section 204. Employers, for example, must include all bonuses (cash and non-cash) on a regular paycheck, as bonuses are taxable. In addition, all payments for work performed during the 1calle and 15th of each month must be paid between the 16th and 26th of the same month. If the work was done between the 16th and the end of the month, wages must be paid the following month, between the 1calle and 10th.
– ¿Cuáles son las leyes sobre comisiones impagas o pagadas tarde?
I Did Not Get Paid on Time – What can I Do?
Wage disputes are not uncommon due to unpaid wages, late paychecks, and disagreements over bonuses and commissions. This is particularly true when they worker has been fired, or they voluntarily resign. There are various laws that govern your right to commissions and other payments you earned during your employment. Our employment attorneys can determine whether your employer violated the laws, and help you file a claim a wage and hours claim with the applicable agency.
Based on the circumstances, the agency may grant you the right to file a lawsuit against your employer. If so, you can count on our legal team to represent your interests and obtain every penny you are entitled to.
– Comisiones impagas: su derecho a emprender acciones legales
Garantía de tarifa cero
If you are denied commission earnings or a non-discretionary bonus, please take some time to learn about your legal options from one of our attorneys. We are happy to provide you with a free consultation, where you can discuss what happened to you and the best way to move forward, which may include suing your employer for unpaid wages.
If you decide to file a lawsuit, we will take your case without charging you a single penny. Under the Zero Fee Guarantee, we demand the cost of legal fees from your employer. If we secure the compensation you deserve, our expenses are paid at the same time as your settlement. If we don’t win your case, you pay us $0, and we eat the costs associated with your claim.
To schedule a case review completely free of charge, contact California Labor Law Employment Attorneys Group.
