Unpaid Commissions in California: When a Commission Has to Be Paid After You Leave, and When It Can Be Taken Back

A commission is a wage in California, and a commission agreement covering work performed here must set out in writing how commissions are computed and paid. Once a commission is earned, the Labor Commissioner's position is that the employer must do the calculations and pay it on the date of the termination in the case of a discharge, without waiting for its usual commission cycle. The argument in these cases is about the word "earned".

At a glance

• A commission is a wage by statutory definition. Labor Code § 200 defines "wages" to include amounts ascertained on a commission basis.
• A commission agreement for work performed in California has to be in writing. Labor Code § 2751(a) requires it to set forth the method by which the commissions are computed and paid.
• The employer has to hand you a signed copy of the commission agreement and take a signed receipt for it. Labor Code § 2751(b) requires both.
• An expired commission plan's terms are presumed to continue. Labor Code § 2751(b) says that where the parties keep working under an expired contract, the terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.
• The Labor Commissioner says a departing employee need not wait for the usual commission run. Its published position is that it is not permissible to delay payment of earned commissions until the next regularly scheduled payday.
• The Labor Commissioner's position is that a commission awaiting the customer's payment is still payable after you leave. Where the commission was not yet earned at termination and is awaiting a legal condition precedent, the agency says it must be paid immediately once that condition completes.
• What the plan is called does not decide whether the written-agreement rule reaches it. Labor Code § 2751(c)(3) excludes bonus and profit-sharing plans from its own definition of "commission" unless the employer offered a fixed percentage of sales or profits as compensation for work to be performed.
• An employer cannot collect back wages it has already paid you. Labor Code § 221 makes it unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.

Is an unpaid commission a wage in California?

Yes, by statutory definition.

Labor Code § 200 is the definition the wage statutes use. It opens by tying itself to the article of the Labor Code it sits in, and then defines the term:

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(a) "Wages" includes all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.

Read the list at the end. Time, task, piece, commission basis. A commission is one of the ways the Legislature expected pay to be measured, sitting alongside an hourly rate and a piece rate. The Legislature's own phrase for this kind of pay, in the section that supplies the definition the written-agreement rule uses, is "commission wages".

Which is why a commission that has been earned and not paid is not a favor your employer is deciding whether to do. It is compensation for work performed, measured a particular way.

That has a practical consequence at the end of a job. Because commissions are wages, they ride on California's final-pay rules along with the rest of what you are owed, and the deadlines and the late-payment penalty are covered in detail in our guide to when your final paycheck is due in California and how the waiting time penalty is calculated.

What counts as a commission, and what does not?

California's written-agreement rule carries its own definition of commission. A lot of variable pay falls outside it.

Labor Code § 2751(c) borrows its definition from elsewhere in the Labor Code, and the borrowed sentence is this one:

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Commission wages are compensation paid to any person for services rendered in the sale of such employer's property or services and based proportionately upon the amount or value thereof.

Two requirements, both of which have to be met. The payment has to be for services rendered in the sale of the employer's property or services. And it has to be based proportionately on the amount or value of what was sold. A percentage of the deal value fits that description comfortably. A flat payment for hitting a number is a harder fit, and whether it qualifies turns on the plan's actual terms.

Then § 2751(c) lists what its own rule does not cover, in the statute's words:

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For purposes of this section only, "commission" does not include any of the following: (1) Short-term productivity bonuses such as are paid to retail clerks. (2) Temporary, variable incentive payments that increase, but do not decrease, payment under the written contract. (3) Bonus and profit-sharing plans, unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.

Note the scope limiter the statute puts on itself: "For purposes of this section only." These three exclusions tell you whether the written-agreement requirement reaches your plan. They are not a general statement that a payment falling into one of the three buckets is outside California's wage rules.

Two of the three repay a slow read.

The incentive-payment exclusion runs one way. It covers temporary variable incentive payments that increase, but do not decrease, payment under the written contract. A temporary payment that reduces what the written contract would otherwise pay is not what that sentence describes.

The bonus exclusion has its own exception, and it is the useful one. Bonus and profit-sharing plans are excluded unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed. So a plan with the word "bonus" in its title is not automatically outside the section. If what the employer offered was a fixed percentage of sales or profits in exchange for work, the exclusion has an exception written for that. The name at the top of the document is not the test.

What does § 2751 actually borrow from § 204.1?

A definition, and nothing else. If you follow § 2751(c) to the section it borrows from, you will land in Labor Code § 204.1, and its first sentence says commission wages are due and payable once during each calendar month. That sentence is about employees of an employer licensed as a vehicle dealer by the Department of Motor Vehicles. It is not a monthly payday rule for commissioned employees generally, and § 2751 takes only the definition sentence quoted above from it.

The Labor Commissioner's own payday page treats the commission payday exception narrowly. In its list of payday exceptions, the entry for employees of a motor vehicle dealer licensed by the Department of Motor Vehicles who are paid commission wages records that "mechanics and other employees performing repair or related services are not considered commissioned employees."

Does California require your commission agreement to be in writing?

It requires the employer to produce one, hand it over, and get a receipt for it. Labor Code § 2751(a) and (b):

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(a) Whenever an employer enters into a contract of employment with an employee for services to be rendered within this state and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid. (b) The employer shall give a signed copy of the contract to every employee who is a party thereto and shall obtain a signed receipt for the contract from each employee.

Four separate duties are packed into those two subdivisions, and each one is worth reading on its own:

1. The contract has to be in writing.
2. It has to set forth the method by which the commissions shall be computed, which is how the number gets worked out.
3. It has to set forth the method by which they are paid, which is when and how the money reaches you.
4. The employer has to give you a signed copy and take a signed receipt from you.

The in-state trigger is part of the rule as written. The subdivision applies to a contract of employment for services to be rendered within this state.

The expired-plan presumption is the part almost nobody uses. The same subdivision continues:

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In the case of a contract that expires and where the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.

If you have been selling for two years under a plan that expired at the end of year one, and the company's answer is that the plan lapsed so nothing is owed, that sentence is the one to read back to them. The terms are presumed to continue until they are superseded or the job ends.

There is a limit to what § 2751 does, and it is important not to overread it. Section 2751 sets out those duties and stops. It does not state a consequence for an employer that never put the plan in writing, and you should not read one into it. What the section does establish is concrete and still useful: a written commission agreement setting out how commissions are computed and paid, with a signed copy in your hands, is a document California law directs your employer to create and give you. If you were never handed one, you are asking for something the statute told your employer to produce, and that is a reasonable place to start a conversation with a lawyer.

When is a commission "earned"?

This is the question these cases actually turn on.

The answer a departing salesperson usually gets is that commissions are governed by the commission agreement, so if the agreement says you do not get paid after you leave, you do not get paid. That is half right in a way that matters.

The half that is right: the agreement does define the mechanics. Section 2751 requires it to set forth the method by which commissions are computed and paid, so the document is where the calculation and the payment timing are written down. It is the first thing anyone has to read.

The half that is missing: an earned commission is a wage. Labor Code § 201(a) is written in those terms:

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If an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately.

Wages earned and unpaid. The statute pays out what was earned and does not define the word.

The Labor Commissioner's office draws the line in two pieces, and the two pieces side by side are what make the structure visible. The first covers commissions already earned when you left:

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In the event the commissions have been "earned" on or before the date of your termination, the employer must complete the necessary calculations and pay the commissions on the date of the termination in the case of a discharge or a voluntary quit with more than 72 hours prior notice, or within 72 hours of the termination of the employment relationship in the case of a voluntary quit without such prior notice.

The second covers commissions that were not yet earned when you left because something still had to happen:

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If the commission has not yet been earned at the time of termination and is awaiting the completion of some legal condition precedent, for example, receipt of the customer's payment, the commission must be paid to you immediately upon completion of the condition precedent.

A condition precedent is simply something that has to happen before the payment obligation arises, and the agency supplies its own example of one: the customer paying. So the deal you closed in your last week, where the invoice was still outstanding when you handed in your badge, has a published answer attached to it. The agency's position is that the commission gets paid immediately once the condition finishes, after you have gone.

Notice what the agency did with the word at the center of all this. It put "earned" in quotation marks and moved on. It is flagging a term it is not undertaking to define.

The real dispute has a predictable shape, and it is worth understanding before you are in it. The fight is over the word "earned", not over whether you left. An employer arguing that nothing is owed is arguing that the commission had not become yours yet under the plan's own terms. Whether a particular clause in a particular plan does what the employer says it does is a question for a lawyer reading the actual document, alongside your sales records and what you were told when you sold the deal. Nobody can answer it without the paperwork in front of them.

The practical order of operations is short. Find the plan. Find the clause that says when a commission becomes yours. That clause, and not the date you resigned, is what the argument will be about.

When does an earned commission have to be paid after you leave?

Sooner than the usual commission schedule allows, and the Labor Commissioner has shut both of the scheduling doors by name.

The refusal a departing salesperson gets is normally a scheduling one: the commission run has not happened yet, payroll has closed, you will get it with the next cycle. The agency's published position addresses that directly:

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It is not permissible for the employer to wait until the customary time for calculating the commissions of current employees, nor is it permissible to delay payment of such earned commissions until the next regularly scheduled payday.

Both doors, named and shut. The customary calculation time, and the next regular payday.

The same passage from the agency puts the arithmetic on the employer. It says the employer "must complete the necessary calculations" by that deadline, so awkward math is a problem the employer solves inside the deadline rather than a reason for the deadline to move.

The deadline itself comes from the final-pay statutes. Section 201(a) makes wages earned and unpaid due and payable immediately when an employer discharges an employee. Labor Code § 202(a) sets the quit side, for an employee not having a written contract for a definite period: wages become due and payable not later than 72 hours after quitting, unless the employee has given 72 hours previous notice of an intention to quit, in which case the employee is entitled to the wages at the time of quitting.

Late payment carries a price. Labor Code § 203(a) provides that where an employer willfully fails to pay, without abatement or reduction, in accordance with the final-pay sections, any wages of an employee who is discharged or who quits, "the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days." The word "willfully" is in the statute and it does real work, so the penalty is not automatic on lateness. How that penalty is calculated, when it does not apply, and what happens when an employer disputes part of what it owes are all worked through in our guide to when your final paycheck is due in California and how the waiting time penalty is calculated.

Ready to talk it through?

If you have been told your commission went away when your job did, that is worth a conversation before you accept it. We represent employees only, the first consultation is free, and we will tell you plainly what we make of the facts and the plan document you have. Book a free employment law consultation.

Can an employer take back a commission it already paid you?

There is a statute pointed straight at that. It is short. Labor Code § 221:

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It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.

Read the operative words: "collect or receive from an employee any part of wages theretofore paid". The prohibition is aimed at money that already went out to you and is being pulled back in. That covers the classic clawback: the commission hit your March check, the customer cancelled in June, and the company wants the money returned.

What § 221 does not address, on its own words. The section speaks about wages already paid. On its face it does not speak to a refusal to pay a commission in the first place, or to how a draw gets reconciled, or to a chargeback applied against a commission that has not been paid yet, or to a negative balance carried forward into the next period.

Those four arrangements are worth understanding as mechanics, because most salespeople meet them for the first time on the day one of them costs money:

• A draw is an advance against future commissions. You get a predictable amount now, and it is set against what you earn later.
• A chargeback is a reduction applied when a sale unwinds, for instance where the customer cancelled, returned the product, or never paid.
• A negative balance is what is left when the chargebacks and the draw exceed what you earned in a period, and the company carries the shortfall into the next one.

Whether a particular draw, chargeback, or carried-forward balance is lawful depends on how the arrangement is structured and on what the plan document says, which makes it a question for a lawyer with the plan in hand.

The exceptions statute, and the qualifier buried in its middle. Labor Code § 224 sets out when withholding or diverting part of an employee's wages is not made unlawful by § 221 and the sections around it. One ground is that the employer is required or empowered to do it by state or federal law. The second ground is the one to read slowly:

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when a deduction is expressly authorized in writing by the employee to cover insurance premiums, hospital or medical dues, or other deductions not amounting to a rebate or deduction from the standard wage arrived at by collective bargaining or pursuant to wage agreement or statute

The written authorization does not stand alone in that sentence. It arrives with a qualifier attached: "not amounting to a rebate or deduction from the standard wage." It is easy to read that ground as a rule that an employer can deduct whatever you put your name to. The statute does not say that.

The general rules on what can and cannot come out of your pay, including whether signing a form makes a deduction lawful, are set out in our guide to what your employer can legally deduct from your paycheck in California.

One related situation belongs somewhere else entirely. If your commission was cut, your territory reassigned, or your account list stripped because you complained about something, that is retaliation territory rather than a commission-plan question, and it is covered in our roundup of 12 examples of workplace retaliation in California, including a lost commission.

What does your employer argue when they refuse to pay?

Two arguments come up again and again. The first is that the commission was never earned. The second is that the sale was not final, because work remained before the money was safe. Both turn on one document: your written commission agreement.

They say the commission was never earned

This is the more common of the two, and it is not a bluff. California treats a commission as earned once every condition in your agreement has been met. In Sciborski v. Pacific Bell Directory (2012) 205 Cal.App.4th 1152, the Court of Appeal put it plainly: a commission is earned when the employee has "perfected the right to payment", meaning all the legal conditions have been satisfied. Your agreement’s own wording decides the question. An employer reading that wording narrowly has something real to point at.

Where the argument runs out is just as clear. Once those conditions are met, the commission is a wage, and Labor Code § 221 makes it unlawful to take back a wage already paid. The same court said an employer cannot dress a deduction up as recouping an advance when the condition is "unrelated to the sale", or is really an attempt "to shift the cost of doing business to an employee". A customer who pays late, a colleague who mishandles an account, a clerical mistake in the employer’s own records: none of those turn an earned commission back into an unearned one. In Sciborski the employer charged back $19,573.78 after its own clerical error, and a jury found that violated § 221.

There is a further limit if you have already left. In Ellis v. McKinnon Broadcasting Co. (1993) 18 Cal.App.4th 1796, a radio station’s contract said no commissions would be paid on advertising fees the station received after the employee’s final day. The station then collected close to $100,000 on advertising he had already sold, and paid him nothing on it. The Court of Appeal held that clause unconscionable and unenforceable, and awarded him the commissions.

They say the sale was not final

The second argument is about timing. Your employer says the sale had not closed, that work remained to make sure it went through, and that the commission never came due.

A written condition can genuinely do that. In Steinhebel v. Los Angeles Times Communications (2005) 126 Cal.App.4th 696, the plan paid commissions on subscriptions a customer kept for at least 28 days. Sales staff were advanced the money straight away, and the paper charged it back when a customer cancelled inside those 28 days. The court held the chargebacks lawful, because the 28-day period had to happen before the commission was earned at all. An advance, the court said, is money paid when "the employer cannot determine whether the commission will eventually be earned".

Your employer’s own view of whether the sale was complete is not the test. The test is what the agreement said, in writing, before the sale. Labor Code § 2751 requires the commission arrangement to be in writing and requires your employer to give you a signed copy. A condition that appears only after you ask to be paid is not a condition. Neither is one that has nothing to do with the sale itself.

Three documents settle most of these disputes: the written commission agreement and any plan document it refers to, the record of the sale, and whatever shows what you did to close it. Order confirmations, signed contracts and your own pipeline notes all carry weight. If your employer never gave you the written agreement at all, that absence matters too.

How long do you have to file?

Less time than the situation feels like it allows, and the honest answer for commissions is that the deadline depends on which claim you bring and on your own dates.

There is no single commission deadline to look up. What is owed to a departing salesperson can involve the unpaid commission itself, a penalty for paying it late, and sometimes a deduction question, and those do not all sit on one clock. Section 203(b) does say something useful about how one of them relates to another:

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Suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.

So the window for the late-payment penalty follows the window for the underlying wages rather than expiring ahead of it. That sentence points at a deadline. It does not state one.

Do not calendar a date from an article, this one included. Deadlines can run early, so confirm yours with us before you rely on anything. Our guide to whether to file with the Labor Commissioner or sue in court, and what you can actually recover covers how long you have to file a wage claim and how far back an unpaid-wages claim can reach, and how long you have to file a wrongful termination claim in California sets out the deadlines on wrongful termination, discrimination, and breach of contract claims.

Frequently asked questions

Can commission be withheld after termination in California?

The Labor Commissioner's published position is that where commissions have been earned on or before the date of termination, the employer must complete the necessary calculations and pay the commissions on the date of the termination in the case of a discharge, or within 72 hours of the termination in the case of a voluntary quit without more than 72 hours prior notice. The agency also states that it is not permissible to delay payment of such earned commissions until the next regularly scheduled payday.

Do I still get my commission if I get fired?

California Labor Code § 201(a) provides that if an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately, and California's definition of wages covers amounts ascertained on a commission basis. The Labor Commissioner's position is that commissions earned on or before the termination date must be calculated and paid on that date where the employee was discharged. Whether a specific commission had been earned depends on the terms of your commission agreement.

Do I still get paid my commission if I quit?

Labor Code § 202(a) provides that where an employee not having a written contract for a definite period quits, wages become due and payable not later than 72 hours afterward, unless the employee gave 72 hours previous notice of an intention to quit, in which case the wages are due at the time of quitting. The Labor Commissioner applies the same timing to commissions earned on or before the date of termination, and says the employer must complete the necessary calculations by then.

Can I still get paid commissions after leaving my sales job?

The Labor Commissioner's published position covers exactly that situation. Where a commission has not yet been earned at the time of termination and is awaiting the completion of some legal condition precedent, for example receipt of the customer's payment, the agency states that the commission must be paid to you immediately upon completion of the condition precedent. A condition precedent is something that has to happen before the payment obligation arises, and the customer paying the invoice is the agency's own example.

Does California require a written commission agreement?

Labor Code § 2751(a) provides that where an employer enters into a contract of employment for services to be rendered within California and the contemplated method of payment involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid. Subdivision (b) requires the employer to give a signed copy to every employee who is a party to it and to obtain a signed receipt from each employee.

Can my employer take back a commission it already paid me?

Labor Code § 221 makes it unlawful for any employer to collect or receive from an employee any part of wages previously paid by that employer to that employee. That is the classic commission clawback: the commission reached your March paycheck, the customer cancelled in June, and the company wants the money returned. Labor Code § 224 sets out grounds on which withholding or diverting wages is not made unlawful, including a deduction expressly authorized in writing by the employee, and that ground carries its own limit: other deductions not amounting to a rebate or deduction from the standard wage. A signature alone does not settle it.

Is a bonus the same thing as a commission under California law?

Not for the purposes of California's written commission agreement requirement, which excludes short-term productivity bonuses such as are paid to retail clerks, temporary variable incentive payments that increase but do not decrease payment under the written contract, and bonus and profit-sharing plans. The bonus exclusion has an exception: it does not apply where there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed. The plan's title is not what decides it.

Are commissioned employees in California paid once a month?

No. The once-a-month commission payday rule in Labor Code § 204.1 applies to commission wages paid to a person employed by an employer licensed as a vehicle dealer by the Department of Motor Vehicles. Labor Code § 2751 borrows only the definition of commission wages from that section, not its payday schedule. The Labor Commissioner's payday page treats the same exception narrowly, recording that mechanics and other employees performing repair or related services are not considered commissioned employees.

My employer says the sale was not final. Can they refuse to pay my commission?

Only if your written commission agreement made that a condition of earning the commission, and said so before the sale. California requires the agreement to be in writing and requires your employer to give you a signed copy (Labor Code § 2751). A condition that is missing from the agreement, or that has nothing to do with the sale itself, does not defeat a commission you have already earned.

Where to start

Get the paperwork before you get into an argument. The commission plan, every version of it you were ever given, and the sales records showing what closed and when. If the plan expired and you kept selling under it, keep that version too, because the statute has a presumption about exactly that situation.

Then find the clause that says when a commission becomes yours. That sentence, more than the date you left, is what a lawyer will want to read first. Our guide to what records you can make your employer hand over covers how to request your personnel file and pay records in writing. If overtime is also part of your pay problem, that is a separate calculation with its own rules, and our unpaid wages and overtime practice page covers it.

We act for employees across California, we do not represent employers, and the first conversation is free.

The Law Offices of Jonathan J. Delshad is a Los Angeles based employment law firm representing employees across California in wrongful termination, discrimination, retaliation, harassment, and wage and hour matters. Representing employees is the core of the firm's practice. Mr. Delshad serves as Editor-in-Chief of the California Wrongful Termination Law Review and trained at Latham & Watkins. Recognition includes Super Lawyers (2022 to 2027), Best Lawyers (since 2017), and an Avvo 10.0 "Superb" rating. Reviewed for California employment law accuracy. Last updated: August 25, 2026.

Attorney advertising. This article is educational only and is not legal advice. Reading it does not create an attorney-client relationship, which exists only under a signed engagement agreement. Every case is different, and outcomes depend on the specific facts. Deadlines can run early, so consult a lawyer promptly about your situation.