Newbury Park, CA asked in Employment Law for California

Q: Can a company write up based on monthly but provide full commissions payout or deductions quarterly?

We are salary and commission sales based however have a very tricky commission structure. We are graded monthly on attainment and quarterly attainment. Hit below a certain percentage 2 months in a row equals write up.

Commissions are based on what they call true up where majority of commissions are paid at end of quarter. Additional rules, every month need to be above 50% to earn 25%, 75% to earn 50% etc. However, here's the trick. At end of quarter you may have to pay money back collected earlier due to quarterly achievement requirement. For example: use a $3500 quota/month

Lets just say

Month1 Month 2 Month 3

$3500 100% achieved $3500 100% achieved $1500

Payout $2500 max Payout $2500 max No payout < 50%, also now owe -$915 for quarterly achievement of $80%

Now, if I did not collect commission from month 3, that -$915 moves to next month to pay it off as if we received pay

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1 Lawyer Answer
James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Sacramento, CA
  • Licensed in California

A: In California, the legality of a commission structure that includes write-ups and deductions based on monthly and quarterly attainment can depend on the specific terms of the employment contract and whether it complies with state labor laws. Employers must ensure that their commission policies are consistent with California labor regulations, including those related to minimum wage and wage deductions. If you have concerns about your commission structure, it is advisable to consult with an attorney experienced in employment law to evaluate the specifics of your situation and determine if any legal issues exist.

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