Irvine, CA asked in Contracts, Business Law and Employment Law for California

Q: Can a sales organization change a commission plan after the time period for that plan has passed?

I work in sales. We had a commission and payment plan we all agreed to for Q2 (April-June). The month after they changed the commission plan because "too many people were doing poorly" however I was doing very well and now they have taken away everything I did in Q2 during COVID after we agreed on a commission. is this legal?

1 Lawyer Answer
Maurice Mandel II
Maurice Mandel II
  • Newport Beach, CA
  • Licensed in California

A: I had a case like this several years ago, but in that case, it was changed because the salesmen did so WELL! Sometimes these plans contain language saying that they can be unilaterally changed/discontinued at any time. That may not be an enforceable term of the contract. If you were paid the commission quarterly, then you did everything required under the contract to earn your commission, and once a person has fully performed a contract the other party cannot change the terms. i.e.- you hire a painter to do your house for $5000, when he is done you say you are only going to pay $3000, you cannot do that because the painter fully performed his end of the contract. It sounds like you fully performed the contract under the terms up through Q2 and you are entitled to your Q2 commission.

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