Your Legal Rights to Collect Unpaid Sales Commissions

Many industries pay commissions on sales as an incentive. This includes commission-only salesperson positions and commissions added to regular salaries. These jobs entail anything from selling cars to selling real estate.

Unfortunately, your employer may not want to give you the promised commission payments after you make the sale. If you are having trouble collecting the money promised, talk to an experienced employment law attorney for legal advice. 

What Is a Sales Commission?

According to the U.S. Department of Labor (DOL), commissions are money paid to workers after completing work tasks — typically product sales. A commission can be the sole form of compensation or as a bonus to encourage results.

The Fair Labor Standards Act (FLSA) does not require employers to pay commissions. However, earned commissions are considered wages for workers who earn the sale. If the payment of commissions is part of your employment contract, your employer has to follow through with the agreement. To be enforceable, most sales commission agreements have to be in writing.

Do You Have a Detailed Sales Agreement?

If you are an employee paid by sales commissions, you should have a written agreement that details commission pay. This should include when the commission is earned and the percentage or amount of the sales commission.

Make sure terms are clearly stated in your written contract. This includes performance requirements or quotas to earn the commission. A contract that does not clearly define terms and conditions is more likely to lead to legal disputes.

When you take a position that pays commissions, you should be aware of your legal right to collect unpaid sales commissions. Employee rights may differ according to your jurisdiction.

What if There Is No Contract?

It can be more difficult to collect on a commission when you don’t have written evidence. Where no employment contract exists, you’ll need other evidence to determine the correct amount of commission that you should receive. The same applies when the contract terms are unclear. Evidence can include other writing, emails, text messages, or witness statements.

What Are Employee Laws on Collecting Commissions?

Sales commission disputes often come up when employees leave jobs and do not get their earned commissions. State laws vary in terms of upholding the terms of employment contracts regarding the payment of commissions.

Typically, employers cannot withhold already earned but unpaid commissions when employees leave their positions unless the employment agreement states otherwise. If your employer fires you just to avoid paying those commissions, you may still be eligible to receive your commission.

If you are considering resigning from a sales position, make sure you will receive your commission for any sales you made during your employment. Review any severance agreements before you sign. You can have an employment lawyer review the agreement to make sure your rights are protected. They can give you legal advice about how to handle legally earned sales commissions after you leave a job.

Keep any employee handbooks, employment contracts, and communications with your employer regarding the payment of unpaid commissions. Your lawyer can use this as evidence if there is a dispute.

Can You File a Lawsuit for Your Commissions?

If your employer owes you for unpaid commission, you may be able to file a complaint with your local labor law commission. State laws generally enforce minimum wage and overtime pay claims. If your employer has violated your commission contract, you can file a breach of contract claim in court. In a lawsuit, your attorney may be able to help you recover:

• Unpaid commissions
• Lost benefits
• Punitive damages
• Attorney’s fees

A lawyer with experience in employment law can review your case, explain your legal options, and help you negotiate payment arrangements with your employer. If your employer refuses to play, your lawyer can file a lawsuit to recover damages.