Legal Question in Employment Law in California
Deducting bad-debt write offs from commissioned sales
I'm paid by base pay + commission pay. If an account does not pay their bill and the amount becomes uncollectable, my company deducts that amount from my total commission sales in the month the bad-debt is written off. This sometimes is over a year since the amount was incurred. One particular month it affected over $200 in my gross take-home commission. Can they do this? I understand that if I make an error in the order and we make an adjustment to the amount due, then, I agree. But these debts are charge offs since we can't collect the money.
2 Answers from Attorneys
Re: Deducting bad-debt write offs from commissioned sales
This response assumes you work in California for a California employer. From what you describe, it appears you do not have a clear understanding of your commission agreement with your employer. It is suggested you obtain a copy of the commission agreement and read and analyze it. If you have questions thereafter, the first place to start is with your employer. If the employer's answer is unsatisfactory and you feel your employer has unlawfully denied you compensation, you can always file a complaint for unpaid wages with the Labor Commission in the State of California.
Re: Deducting bad-debt write offs from commissioned sales
If the employer pays commissions in advance, subject to adjustment for bad debts, in effect the employer is recovering an overpayment. Some firms make the adjustment after a specific period of time (60/90/120 days). It sounds like they let you use their money longer than most.
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