Are commissioned employees entitled to payment of commissions after termination of employment?
The answer depends on how and when the commissions are earned.
A commission is payment to an employee based on a percentage of sales, orders, or other measures of performance.
New York Labor Law requires that commissioned salespeople receive a written agreement setting forth:
- a description of how wages, salary, commissions, draw and all other monies earned are calculated and paid;
- How often the employee gets paid (which has to be at least twice a month);
- Frequency of reconciliation (if the employee is paid a draw); and
- Any other details regarding payment of wages, draw, commissions, etc.
Also, upon written request, the employer is required to provide the employee with an earnings statement setting forth earnings paid, or due and unpaid.
When do commissions become "earned"?
Commissions become "earned" depending on the terms of the written agreement (see above). Thus, if your employment is terminated, but the commission was earned, the employee is entitled to payment of commissions after termination. If the agreement does not address when commissions are "earned," then a determination of when the commission is earned depends on the past dealings between the employee and the employer. Lastly, if there is no agreement and no past dealings, the commission is considered "earned" when the salesperson produces a buyer ready, willing and able to enter into a contract with the employer.
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