Can my Employer Deduct Expenses From my Commissions?
For employees paid an hourly wage or salary, the law is relatively clear- the employer cannot deduct from your paycheck costs that should be borne by the employer. Put another way, the only lawful deductions are taxes, garnishments, deductions to pay for things that benefit the employee (i.e., health insurance), and in some circumstances deductions the employee has agreed to.
Some commission policies, however, include in their calculation an offset for costs that would not be deductible from an employees salary or hourly wage. For example, a deduction for the cost of product for hair stylists.
The law in Massachusetts is not settled on this question. Employers argue that they have a right to set the amount of commissions and include these deductions as part of the calculation. There is, however, a compelling argument that has been entertained by the court at the trial level that this is no different that unlawfully spreading the employer's operating cost to the employees.
The correct answer may vary from situation to situation, and depend in part on how the commission policy is drafted. If you have questions about deductions from your commission pay, you should consult an employment lawyer and get an individualized assessment.
Learn more here about commission pay under the Massachusetts Wage Act.
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