Newbury Park, CA asked in Employment Law for California

Q: Can an employer deduct or require an employee to owe commissions based on quarterly achievements?

We are salary and Commission based outside sales. New commission structure follows a monthly and quarterly format. Monthly need to achieve atleast 50% of quota to get paid 25%, achieve 75% to get 50%, achieve 100% to get 100%. Please follow along on a $3500 quota

Month 1 Month 2. Month3

$3500 100%. $3500 100%. $1400 40%

Month 3 you collect $0 for commission, and in addition you now have -$700 balance owed back to company due to quarterly achievement, yet based on something we did not collect as if this was rent.

Additionally, since Month 3 collected no commissions and you still have a balance, that balance gets carried to the next months commissions to retire.

In short, the company gained $1400 for your sales in Month 3, as well as Collecting $700 from employee for underachievement in Month 3.

This spans over 300 employees and mind you, our commission plans have been redone 4 times in 2023.

Thank you for your help.

Related Topics:
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: Under California law, employers are generally allowed to set commission structures and policies as long as they comply with labor laws and regulations. However, if these commission policies result in an employee's wages falling below the minimum wage for the hours worked, they may violate labor laws. It's advisable for employees facing issues with their commission structure to consult with an attorney experienced in employment law to assess the specific circumstances and determine if any legal action or recourse is appropriate.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.