Legal Question in Employment Law in California

Re: Commission

The payment of commissions is based upon contract. If no contract was entered into (which is something you should do in the future), then one may be implied by past practice and custom.

If the practice and custom is to pay the second half of the commission upon completion of the job, then that is what you should continue to follow. Commission forfeitures are frowned upon unless there is an express policy advising the employees they must be employed to receive their commission, backed by a sound reason for the forfeiture, i.e., work remains to be done by others to earn the commission.

If that is not the established policy, it is my opinion that the commission should be paid upon completion of the job.

Re: Commission

Depends, your company policy manual and /or the employment contracts should define this issue in a fair and reasonable manner, consistent with industry practice, the laws, and the company need to have others deal with the contracts at issue. If the manual doesn't, then you roll the dice and take your chances. The worst case scenario is if you deny the final payment, and then lose at a Labor Commissioner hearing on his claim. You'd have to pay him then, possibly with interest and penalties. In the meantime, I suggest you make your company professional and get your policy manual implemented and current. Feel free to contact me if you want to do consult on your payment decision or the manual.

Re: Commission

If the salesperson's job is completed when he contract is entered into and the only other requirement for them to be paid is completion of the work by other employees, then I am afraid that you are more than likely still responsible for payment to that employee for jobs that were not completed by the time they are no longer employed by the company.

Variations could exist based on the industry standard, as well as what your particular company has done in past, similar situations.

Of course, if the employee is required to maintain the relations with the customer and required to have and maintain an ongoing relationship wth the customer during the course of the construction, then there may be some grey area that might allow you to not pay these additional commissions. It will take some research to find a more complete answer; in additional to a few more facts about your company.

Our firm specializes in trusts and estates, I believe we can assist you for a minimal charge.

Please feel free to contact me at the number and/or email provided by LawGuru, we offer free consultations, so it can't hurt to have us review whatever you have. Additionally, you can learn a little more about our firm as well as some very useful information about business rules and regulations on our firm's site at RulesOfEmployment.com

Re: Commission

I think it's clear that you owe the commission (though not on any overages or add-ons that were contracted after the salesman was terminated).

Your contract (whether written or merely implied from prior dealings) with the salesman will govern whether you must pay on termination. Since you tell us that the usual approach has been to pay the second half on job completion, you'd certainly be justified in waiting to pay.

If, however, you just want to be done with this guy, and have him out of your hair, pay the full commission, and get him to sign a severance agreement...

This can be very good protection against future problems from this fomer employee...

You'll need an experienced labor/employment lawyer to draw up a good severance contract.