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Ask Leslie: My Employee Resigned. Do I Have To Pay Commissions?

By Leslie Zieren, The McCalmon Group, Inc.

Dear Leslie:

My employee was paid hourly, plus commissions on sales. Is he entitled to commissions on sales in progress, but not completed before he quit?

Signed: Bob

 

Dear Bob:

A written commission policy is a must. Whether you owe this employee a commission depends on how you define when and how a commission is "earned". You must define activities must be completed for the commission to be considered earned.

For example, is a commission earned when the customer signs a contract or places a purchase order or not until the money for the sale is actually received by your organization?

When an employer must make a commission payment to an employee will depend on your written policy and state law.

State laws vary regarding commissions. Some, for example, consider them "wages" and require them be paid within a specified period of time, no matter your policy. Because state laws vary, work with your local counsel to draft a commission policy that comports with your local law.

Jack McCalmon and Leslie Zieren are attorneys with more than 50 years combined experience assisting employers in lowering their risk, including answering questions, like the one above, through the McCalmon Group's Best Practices Help Line. The Best Practice Help Line is a service of The McCalmon Group, Inc. Your organization may have access to The Best Practice Help Line or a similar service from another provider at no cost to you or at a discount. For questions about The Best Practice Help Line or what similar services are available to you via this Platform, call 888.712.7667.

If you have a question that you would like Jack McCalmon or Leslie Zieren to consider for this column, please submit it to ask@mccalmon.com. Please note that The McCalmon Group cannot guarantee that your question will be answered. Answers are based on generally accepted risk management best practices. They are not, and should not be considered, legal advice. If you need an answer immediately or desire legal advice, please call your local legal counsel.

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