When is a Commission Considered "Earned" Under the Wage and Hour Laws?
It is fairly easy to tell when wages or salary are "earned" for purposes of the Wage Act, based simply on time worked during a pay period. It can get more complicated to know when commissions are earned.
First, an employer can establish by policy when commissions are considered earned. A policy might say they are earned when the order is placed, or when the product is delivered, or when the customer is invoiced, or even not until full payment is received. If there is a written policy, this definition of "earned" will control.
If there is no written policy, the Attorney General has opined that the default position should be that commissions are earned when the customer agrees to purchase the product or service, even if there is a time delay in deliver, invoicing, or payment.
It is particularly important to know when the obligation to pay is triggered in the context of termination of employment. Many employers will say that you need to still be employed at the time of commission payout to receive commissions- the reality is that if you have earned those commissions before termination, even if they have not yet been paid, you should be entitled to them.
Learn more here about commission pay under the Massachusetts Wage Act.
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