Payment of Sales Commissions after Employment Termination

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What Is Payment of Sales Commissions after Employment Termination?

In certain industries, employee compensation is based on commissions from actual sales. When these commissions are paid varies by employer, but generally payment is only made after a sale has closed and the company has received payment for the sale. Because of the inevitable delay between when a sale is negotiated and when payment is received, conflicts can arise, particularly if a salesperson's employment is terminated and commission payments are pending.

Are Commissions Owed after Termination of Employment?

The courts have differed on whether, and if so, when, commission payment is owed after termination of employment. Generally, several factors are considered:

As an Employer, How Should I Pay Commissions?

If compensation is based on commission, an employer should establish and announce a clear commission payment schedule including:

All other compensation terms, including recoverable and irrecoverable draws, should also be specified.

What Should I Expect as a Commissioned Employee?

If your employer does not have clear guidelines on commission policies as outlined above, then you should request clarification to avoid any future conflicts.

Do I Need an Attorney?

Whether you are an employer or an employee, if a conflict arises regarding a commission payment, seeking advice from an employment attorney specializing in compensation and employment issues can help determine the prevailing decisions in your jurisdiction and the likelihood of success in your case.

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Last Modified: 09-24-2014 10:20 AM PDT

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