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.
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.
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