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Can employers withhold commissions?

On Behalf of | Sep 21, 2023 | Wage & Hour Laws |

Employees who have commissions as part of a compensation package put in hard work to reach their goals.

Those commissions often serve as a significant portion of income earned, making it important for both employers and employees to understand the rules governing commission withholding and how to address disputes.

What is a commission agreement?

In Florida, though not legally required, it is recommended that employers and employees should have a written commission agreement that outlines the terms, conditions, and calculation methods for commissions. An employee should receive this agreement before they start working, ensuring transparency from the beginning.

When can employers legally withhold commissions?

Florida law permits employers to withhold commissions under specific circumstances. One common reason is when an employee’s employment terminates before the commission becomes due and payable. If an employee leaves the company before earning their commission, the employer may have the right to withhold it. Additionally, if the employer has a written policy or agreement that states an employee must be employed on the date that the commission is due, then the employee may not be entitled to the commission even if the employee has otherwise done the work to earn that commission. Also, if the commission agreement specifies certain conditions or performance targets required to trigger payment, employers can withhold commissions if these conditions aren’t fulfilled.

How can an employee recoup withheld commissions?

Employees have options to recoup withheld commissions if they believe their employer has acted unfairly. First, they can engage in open communication with their employer to resolve the issue amicably. This dialogue may reveal misunderstandings or discrepancies easily solved without legal action. If the dispute remains unresolved, employees can file a wage complaint. If the above results in unfavorable outcomes, a person may file a lawsuit.

The U.S. has more than 2,158,440 commissioned employees who rely on commissions to make ends meet. When unjustly withheld, they have the right to seek payment.