Court Upholds Chargeback Provision in Employee Sales Commission Contract

Salespeople often work on a straight commission, or a compensation plan that includes both base pay and commission. Employers often find it useful or necessary to advance commissions to salespeople after a sale is made, but before commissions are fully earned. This practice may be standard within a particular industry, necessary to compete with other employers to attract talent, or as a recognition of cost of living pressures, not to mention good employee relations.

But what happens when commissions that have been advanced are not earned, or sales deals that support such commissions fall apart or get cancelled, denying expected revenue to the employer? May an employer charge back the salesperson/employee for advanced commissions in such situations?

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Robert Freedman - Partner at Tharpe & Howell, LLP | Attorney Advertising

Written by:


Robert Freedman - Partner at Tharpe & Howell, LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.