Wage and hour disputes can often arise when commissions form a significant portion of an employee’s earnings. Whether you’re in sales, marketing, or a similar role, the compensation you earn is often a direct result of your hard work. But can an employer take away your commission? Is this legal, and how can you be protected as an employee? Understanding payment laws and knowing your options can help you navigate this tricky situation.

Why Does It Matter if an Employer Takes Away Your Commission?

Commissions are payments made to employees, typically based on performance or sales results. Unlike a fixed salary, they are variable and can fluctuate according to an employee’s achievements. They are essential because they reward productivity and motivate team members to meet or exceed their goals. In many cases, it represents a significant portion of an employee’s income, so it’s crucial to understand your rights if your employer attempts to withhold them.

Can an Employer Legally Take Away Your Commission?

In Tennessee, commissions are typically considered earned wages, which means they cannot be taken away arbitrarily once earned. However, disputes regarding commission payments can arise under specific circumstances, such as:

• Unclear or Unfair Commission Structures: Some commission agreements may be vague, leading to misunderstandings between employers and employees.
• Failure to Meet Performance Conditions: Some employers may argue that certain sales targets or conditions were not met, impacting commission eligibility.
• Employment termination: If your employment is terminated, some employers may try to withhold commission payments for sales made before your departure.

While employers may have their reasons, employment laws exist to protect employees from unjust practices.

Commission Payment Laws: What You Should Know

Understanding commission rights and laws can vary by location, but some general principles apply across the U.S., including Tennessee:

1. Commissions as Wages: In Tennessee, once a commission is earned, it is considered part of the employee’s wages. This means that an employer withholding commission could be violating wage and hour laws.
2. Employment Agreements Matter: Your right to receive commissions is often governed by your employment contract. It’s critical to review this document carefully to understand the conditions regarding commission payments, including any situations where commissions can be forfeited or withheld.
3. Timing of Payments: Tennessee law requires employers to pay earned commissions no later than the next scheduled payday after the wages are earned. If your employer is delaying payments, it could violate these laws.
4. Commissions After Termination: This is one of the most common areas of dispute. If you’ve made a sale but left the company before the payment was made, you may still be entitled to that commission. However, employers in Tennessee may have policies outlining specific circumstances under which commissions are not paid after employment ends.

Common Employee Commission Disputes

Employee commission disputes are not uncommon, and can arise in various forms. Here are some of the most frequent conflicts they face:

• Delayed or Non-Payment of Commissions: An employer may delay or refuse to pay out commissions without a clear explanation.
• Disputed Calculation Methods: Disagreements can occur over how commissions are calculated, including whether bonuses, returns, or discounts affect totals.
• Unclear Commission Structures: Vague commission structures can lead to misunderstandings, resulting in disputes.

If you find yourself in any of these situations, it’s essential to address the issue as quickly as possible. Keep a detailed record of your sales, the agreed-upon commission structure, and any communications regarding your commission payments.

What to Do if Your Employer is Withholding Your Commission

If you believe your employer is unfairly withholding your commission, consider these steps to protect your rights:

1. Review Your Contract: Start by examining your employment contract and any written commission agreements. This will help you understand the terms under which commissions are to be paid
2. and whether your employer is violating those terms.
3. Document Everything: Keep thorough records of your sales, commission payments, and any communications with your employer about commissions. This documentation will be essential if the dispute escalates.
4. Communicate with Your Employer: Try to resolve the issue directly by discussing the situation with your employer. In some cases, misunderstandings can be cleared up with open communication.
5. Seek Legal Advice: If your attempts to resolve the issue are unsuccessful, consider consulting an employment lawyer. An attorney specializing in commission rights and employment law can help you understand your options and potentially recover any unpaid commissions.

Protecting Your Commission Rights

As an employee, it’s essential to know your rights when it comes to commission payments. Being paid commission during FMLA leave, for example, can be another complex issue, which is why it’s crucial to stay informed and updated. Employers should follow clear policies regarding payment structures, and any disputes should be handled in accordance with the law. If you feel that your rights are being violated, it’s crucial to act quickly to protect your income and ensure fair treatment. If your employer is unjustly taking away your commission or withholding it without justification, you don’t have to face the situation alone.

At The Crone Law Firm, we specialize in protecting employees’ rights and can help you navigate these disputes. Contact us today for a consultation, and let’s discuss how we can secure the commissions you’ve rightfully earned.