How do I know when I have a claim for unpaid commissions?
Attorney Answer: This is where there’s been a great deal of litigation. The Wage Act statute states that an employer violates the Wage Act where it fails to pay commissions that have been “definitely determined”. That phrase leaves a great deal of wiggle room, but the following general principles have grown out of the cases on this question that have been decided at the appellate level:
a. Company policy governs whether a commission has been “earned”, though the company cannot change the rules of the game in midstream. So, for example, if a commission is payable when a certain sales quota is obtained, but then during the middle of the year the company raises the quota amount, that action by the company is impermissible to deny an employee the earned commission.
b. All contingencies attached to the commission must be satisfied, though the company cannot take actions unilaterally to keep any contingency in place. So, for example, if the company receives payment in Year 1, it cannot book the payment in Year 2 for commission determination purposes.