Commissions often make up a significant portion of an employee’s income, especially in sales and performance-based roles. If your employer hasn’t paid you the commissions you’ve earned, you might be wondering about your legal options. This article explores whether you can sue your employer for unpaid commissions and outlines the steps you can take to address the issue.
Understanding Commissions
A commission is a form of compensation paid to an employee based on the performance of certain tasks, such as making sales or achieving specific targets. Commissions are often outlined in employment contracts or commission agreements, which specify how and when they are earned and paid.
Legal Rights Regarding Unpaid Commissions
Under both federal and state labor laws, employees have the right to be paid all wages they have earned, which includes commissions. “In New York, for instance, the New York Labor Law explicitly protects employees’ rights to receive agreed-upon wages, including unpaid sales commissions,” explains NY employment lawyer, Erik Langeland.
Employment Agreements Matter
Your right to commissions largely depends on the terms specified in your employment contract or commission agreement. These documents should detail:
- How commissions are earned: This could be upon the signing of a contract, delivery of a product, or receipt of payment from a client.
- When commissions are paid: The agreement should specify the payment schedule.
- Conditions for forfeiture: Some agreements include clauses where commissions are forfeited under certain conditions, like termination of employment.
Steps to Take If You Haven’t Been Paid
- Review Your Agreement: Carefully read your employment contract or commission agreement to understand the terms regarding commissions.
- Document Everything: Keep records of sales made, communications with clients, and any correspondence with your employer about commissions.
- Communicate with Your Employer: Address the issue with your supervisor or HR department. There might be a simple oversight or administrative error.
- Send a Formal Demand Letter: If initial communications don’t resolve the issue, consider sending a written demand for payment outlining the amount owed and referencing the agreement terms.
Legal Options
If your employer still doesn’t pay your commissions, you may have legal recourse.
Filing a Complaint with the Labor Department
- State Labor Department: You can file a wage claim with your state’s labor department. In New York, the Department of Labor can investigate wage claims and may help recover unpaid wages.
Suing Your Employer
- Breach of Contract: If your employer violated the terms of your agreement, you might sue for breach of contract.
- Wage and Hour Lawsuits: Under state and federal laws, you might file a lawsuit for unpaid wages, which can include commissions.
- Possible Remedies: Courts may award you the unpaid commissions, interest, and possibly attorney’s fees and damages.
Considerations Before Suing
- Cost-Benefit Analysis: Legal action can be costly and time-consuming. Weigh the potential recovery against the costs.
- Consult an Attorney: Employment laws can be complex. An attorney can help assess the strength of your case and guide you through the process.
Protecting Yourself Moving Forward
- Clear Agreements: Ensure that all commission terms are clearly outlined in written agreements.
- Regularly Update Records: Keep meticulous records of all transactions that contribute to your commissions.
- Understand Employment Laws: Familiarize yourself with state and federal laws regarding wages and commissions.
Featured Photo by Thirdman
