If you’re dealing with a commission dispute, you’re not alone. They happen across all industries in New York, from Wall Street traders missing bonuses to sales teams facing changes in how commission is calculated. Fortunately, there are clear legal paths to resolve commission disputes.
This guide explains your rights and gives tips on handling commission disputes with your employer. You’ll learn what counts as a commission dispute, how an experienced attorney can help, and what to expect if you seek legal advice.
What Is a Commission Dispute?
A commission dispute happens when an employee and employer disagree about earned commissions. Common issues include unpaid earned commissions or payments lower than what the employee thinks they’re owed under their employment agreement.
In sales jobs, commission disputes usually happen because of unclear employment contracts or disagreements about when a commission is considered earned. For example, a salesperson might claim unpaid commissions after successfully closing deals, but their employer follows a different schedule to pay commission. Other common conflicts are claims of being underpaid or issues with overtime pay calculations.
Real estate commission disputes often happen between agents, brokers, and agencies. Disagreements might involve the payment of commissions after a property sale, commission splits between agents, or disputes over who rightfully earned the commission. When an agent believes there’s a breach of contract regarding their commissions, they may need legal help to resolve the situation.
In financial services, there may be commission disputes with investment advisors, insurance agents, or brokers who work on commission-based compensation. They may face issues with unpaid wages when there are disagreements about commission rates, timing of payments, or qualification criteria outlined in their employment contract.
How a New York Lawyer Can Help You with Commission Disputes
A skilled New York attorney can help protect your rights and recover earned commissions through various legal strategies. They understand New York labor law and can guide you through every step of the process. Here’s how lawyers can assist with your commission dispute:
- Case assessment: Your attorney will analyze your employment agreement, commission structure, and payment history to determine how strong your case is and if there are potential violations of state and federal laws. Then, they provide honest legal advice about your options and likely outcomes.
- Evidence gathering and documentation: Lawyers methodically collect and organize evidence, including written agreements, commission statements, sales records, and communication history, to prove your case.
- Representation in negotiations and court:
- Negotiation techniques: Attorneys use their experience to negotiate directly with employers to get fair compensation for their clients without going to court.
- Mediation processes: If direct negotiations stall, lawyers guide you through mediation and present your case to reach a mutually acceptable resolution.
- Litigation: If needed, attorneys prepare comprehensive legal strategies to present your case in court, including protecting whistleblower rights and pursuing all available legal remedies within their practice areas,
What Counts As “Commission” Under New York Law?
A commission is pay earned for making sales. It can be a percentage of each sale or based on total sales. For some employees, earned commission is in addition to an hourly wage or salary. But for “commission only” workers, it’s their only compensation.
In either case, New York state law requires that employers who pay on a sales commission basis outline the terms in a written agreement that clearly specifies:
- How wages, salary, drawing accounts, commissions, and all other monies earned and payable will be calculated.
- Payment schedules and frequency
- Details about draw reconciliation (if applicable)
- Terms for handling payments when employment ends
The employer and employee must sign the agreement. Employers must maintain the records for three years after the employee leaves.
Do Employees Have the Legal Right to Commission Payments?
Under New York state law, once a commission is “earned,” it’s treated as an employee’s wage, i.e. earnings “for labor or services rendered.”
Your commission agreement should define when a commission is “earned,” such as:
- A customer signs a contract
- The company gets paid
- A product or service is delivered
- Other specific conditions set by the employer
After the conditions of “earning” are met, the employee is entitled by law to receive the commission within five days.
When Can My Employer Legally Make Deductions From Sales Commission Payments?
New York law strictly limits what employers can deduct from earned commissions. They can only make deductions required by law, such as taxes, or those you agreed to in writing, like insurance premiums or union dues.
However, different rules apply to unearned commissions. Employers can make adjustments for costs like shipping or discounts if they’re written in the commission agreement. Deductions you didn’t agree to could be considered withholding wages, which is a form of wage theft.
Are Commissioned Salespeople Covered By Minimum Wage And Overtime Laws?
Commissioned salespeople in New York are usually entitled to minimum wage and overtime protections under the Fair Labor Standards Act unless they are considered “exempt” under one of the stated legal exceptions.
A common exception is for an “outside salesperson.” These are employees who do most of their sales work away from their employer’s office. A classic example is an insurance agent who regularly travels to meet clients at their homes or offices.
However, working from home or remotely doesn’t make someone an outside salesperson. To qualify, the employee must actively work in the field, meeting clients, finding new customers, or promoting products.
Commissioned salespersons who aren’t “outside salespersons” can be entitled to overtime. Their commissions must be included when calculating their overtime rate for each pay period.
If a non-exempt commissioned salesperson rate in a pay period, their employer has to make up the difference. This is often done with a “draw,” which is a type of advance payment to.
Am I Required to Repay My Employer for Draws Against Commission?
A draw is an advance payment on future commission earnings. Employers use them when a commissioned employee doesn’t earn enough to make minimum wage during a pay period. Your commission agreement must explain how and when the draw is balanced with your earned commissions, such as every 90 days.
Employers can only recover draws from future commissions, not from base salary, benefits, or other compensation. When salespeople leave a company, they usually don’t have to repay outstanding draws unless their commission agreement explicitly states otherwise.
If your commission agreement does not specify draw repayment terms and schedules, your employer can’t require you to pay them back.
Does Commission Have to Be Paid to a Salesperson Who No Longer Works for the Company?
Commission payments after employment ends are a frequent source of disputes. The law is clear: companies must pay any earned commissions regardless of whether an employee was terminated or resigned. However, disputes often arise when it’s unclear whether a commission was actually “earned.”
These situations commonly occur when:
- Commission agreements are unclear about payment terms
- No written agreement exists
- There’s disagreement about when a commission becomes earned
In New York, when agreements lack clear definitions of “earned” commissions, courts reviews the previous employment relationship. They look at past payment patterns between the employer and salesperson. Without such history, commissions are typically considered earned when a salesperson secures a ready, willing, and able buyer.
Given the complexity of these situations, consulting an employment lawyer is recommended when facing commission payment disputes. An experienced attorney can evaluate your case and guide you toward recovering your earned compensation, whether or not you have a written agreement.
How Can I Prevent Commission Disputes?
The best way to protect yourself is to work for a company with a reasonable, written commission plan. Ideally, the commission agreement should clearly explain when you earn commissions. Try to avoid companies with unfair payment terms.
Ask for a copy of the written commission agreement, and read it carefully to understand how it works and when you will be paid. Keep records of all of your sales, pay stubs, and any other documents showing how you are usually paid.
Under New York law, you can ask your employer for a “statement of earnings.” This will show how much they’ve paid you and what’s still owed.
If you have a problem with your commission, keep detailed records of all communication with your employer and with the customer.
In general, commission disputes are easier to resolve if the facts can be established with documentation and clear evidence.
Since resolving commission disputes on your own can be difficult, it’s best to consult with an employment attorney.
A New York employment lawyer can review your situation, tell you what documentation and evidence you need, and help you recover any unpaid commissions.
What to Expect During a Consultation with Commission Dispute Attorneys
When you first contact our employment law attorneys, we’ll provide a supportive and thorough initial consultation to understand your unique workplace challenges. Here’s what you can anticipate:
- Initial consultation overview
- Confidential assessment due to attorney-client relationship
- Listen to your detailed account of events
- Analysis of potential legal strategies
- Document review
- Bring your employment contract and commission agreement
- Past pay stubs and commission statements
- Any relevant emails or communications about commissions
- Discussion of your situation
- Clear explanation of when and how the dispute arose
- Timeline of events and attempts to resolve the issue
- Specific instances of underpayment or nonpayment
- Legal rights assessment
- The attorney explains relevant New York labor laws
- Review of potential violations by employer
- Discussion of a statute of limitations
- Explanation of your legal options
- Strategy development
- Potential approaches to resolve your dispute
- Estimated timeline for different resolution methods
- Clear explanation of next steps
- Payment discussion
- Attorney fee structure explanation
- Contingency fee options, if available
- Estimated costs and expenses
- Next steps planning
- A clear outline of immediate actions needed
- Additional documentation requirements
- Timeline for moving forward
Contact a New York Commission Dispute Attorney Today
Whether you’re facing issues with sales commissions, real estate transactions, or financial services compensation, experienced legal guidance can make a significant difference in favorably resolving your dispute.
Our attorneys understand the complexities of commission structures and New York labor laws. We’ve successfully helped hundreds of employees across New York recover their rightfully earned compensation through negotiation, mediation, and litigation when necessary.
Contact our law firm for an initial consultation with an experienced attorney to learn how we can help you.
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