San Ramon, CA asked in Employment Law for California

Q: Is it Legal in California to reduce the amount of commission received when a client does not pay within 40 days?

I am in sales and if my client does not pay within 40 days my commission is reduced by 25% over 60 days it is reduced by 50% and over 90 days I get no commission for the sale. If the client pays my company after 90 days they still get payed but the sales people receive zero commission. We have a base plus commission plan.

Also, the invoices are not even generated until day 8 and it takes my company at least 7 days to process a payment. So we really only have 25 days to actually get a payment in on time before my commission is reduced.

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1 Lawyer Answer
Yitz Erik Weiss
Yitz Erik Weiss PRO label
  • Los Angeles, CA
  • Licensed in California

A: This will depend on the terms of your commission agreement. In California an employee working on a commission basis must be provided with a written agreement, which must be signed by the employee. A commission agreement would typically set forth the commission rates, as well as the method of determining when a commission is deemed earned.

If you have concerns about the particular payment structure or how it is applied by your employer, you should consider contacting an employment lawyer to discuss the matter in more detail.

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