Employees who work on a commission basis are typically driven to succeed and expect to receive the compensation they have earned. Far too often, however, employers delay paying commissions, make improper deductions, or miscalculate the amount due. Unpaid commission disputes are also common when an employment relationship ends and the employer fails to pay out commissions that were earned during employment. Regardless of the circumstances, the best way to protect your interests is to consult an experienced NYC wage and hour attorney.
Lipsky Lowe, LLP, routinely handles commission disputes for employees throughout the greater New York area. We have working knowledge of the state and federal laws applicable to commissioned employees and a proven history of helping our clients obtain compensation they have rightfully earned. If you have not received commissions as part of your agreed upon compensation, our wage and hour attorneys can help. When you become our client, we will be the strength in your corner, fighting to protect your rights.
What are commissions?
A commission is the amount of compensation an employee receives based on a percentage of his or her sales/production; a commissioned salesperson is one whose primary activity is sales and who is paid, in whole or part, on a commission basis. Employees who rely on commissions often work in fields such as:
- Financial services
- Computer and software
- Auto dealerships
- Industrial/medical equipment
- Pharmaceutical sales
- Call centers
While commissions are not governed by federal law, employers must follow New York Labor Law, which requires a commissioned employee’s compensation agreement to be in writing. The agreement must specify how wages, salary, commissions, draws, and all other earnings will be calculated, the frequency of reconciliation, the pay schedule, and details relevant to determination of wages upon termination of employment.
When is a commission considered to be “earned?”
Generally, a commission is earned at the time specified in the employment agreement. Once earned, a commission is considered wages under the Labor Law and employers can only take permissible deductions such as state and federal taxes, expenses incurred by the employee, or deductions specified in the employment agreement.
What is a draw against commissions?
A draw is a payment to a commissioned employee that is credited against future commissions. This is basically an advance minimum payment of commissions that is typically paid like a salary. A draw can only be reconciled against future commission and cannot be recouped from other earnings. Moreover, a commission employee is not required to repay draws if the commission does not become due and payable, unless there is a written agreement requiring repayment of draws.
Are commissioned salespersons exempt from wage and hour laws?
Generally, a commissioned employee is exempt from overtime requirements of the Fair Labor Standards Act as long as (1) the employee works in a retail or service establishment, (2) more than half of the employee’s income is derived from commissions, and (3) the employee’s base pay provides at least 150 percent of the minimum wage for each hour worked in excess of 40 per week.
Under New York State law, by contrast, overtime pay is required for commissioned salespeople who work on the employer’s premises, but not for outside salespeople who travel to other locations. Moreover, a non-exempt commissioned salesperson’s draw and commission must equal or exceed the minimum wage for the agreed pay period, otherwise, the employer must make up the difference on that payday.
Do commissions have to be paid to an employee who quits or is fired?
All earned commissions are legally considered wages which must be paid to the employee even if the employment relationship has ended.
Contact Our NYC Unpaid Commissions Lawyer
If you have been denied rightfully earned commissions, you may have a viable wage and hour claim. Of course, obtaining unpaid commissions from your employer can be challenging, particularly if you have been terminated or left voluntarily. Whether an employer has taken improper deductions, unlawfully recouped draws, or failed to pay commissions or any other earned wages, you need an aggressive employment law attorney on your side. Our legal team will take legal action to help you obtain the compensation you have been denied.
While we prefer to resolve these claims through negotiations, our trial attorneys have the skills and resources to litigate your claim. Depending on the value of your claim, one effective tool may be a class action lawsuit. Here, the claims of a number of people who have experienced similar harm are combined into one action which can maximize your recovery. Whether inside or outside of the courtroom, we will work to hold the employer liable, and make sure you receive the compensation you earned. Please contact our office today for a free evaluation of your case.