An employer can change your commission plan going forward and can withhold payments when your written agreement allows it, but an employer generally cannot take away commission you have already earned. That earned-versus-unearned line is the heart of nearly every dispute over whether an employer can take away commission. Once a commission qualifies as earned under the terms of your plan, most states treat it as wages, and clawing it back looks a lot like taking money out of your paycheck.
What “Earned” Actually Means
The Fair Labor Standards Act does not require employers to pay commissions at all.1U.S. Department of Labor. Commissions Your written agreement is what defines the rate, the calculation, and, critically, the moment a commission becomes earned. Common triggers are the moment a sale closes, the moment the customer pays, or the moment a product ships without being returned inside a specified window. These are not interchangeable. The difference between “earned when the deal closes” and “earned when the customer pays 90 days later” can decide whether you get paid at all.
When the agreement is silent on the earning event, many courts apply the procuring cause doctrine: if your work produced a buyer who was ready and willing to complete the purchase, the commission is yours even if the deal closed after you left. A well-drafted agreement can override that default, so the contract language usually matters more than the doctrine.
If you never received a written plan, some states enforce oral commission agreements, and a consistent pattern of payments can support an implied one.2Workplace Fairness. Commissions Proving terms without documentation is much harder. If you are working on commission right now without a signed plan, getting one in writing should be a priority.
When an Employer Can Legally Withhold or Change Commission
Several situations give an employer a legitimate basis to withhold or reduce commission:
- Earning conditions were not met. If the plan requires you to hit a minimum threshold before any commission kicks in and you fell short, nothing is owed for that period.
- The customer returned the product or canceled the service. Many plans allow chargebacks against your commission when that happens. This is legal when the agreement clearly says so. Without such a clause, the employer generally cannot claw back commission on a completed sale just because the customer later changed their mind.2Workplace Fairness. Commissions
- The employer changed the plan going forward. There is no federal law setting a notice period, but changes can only apply to future sales. If your agreement requires advance notice of a set number of days, the employer must honor that timeline.
The controlling principle is prospectivity. An employer can announce tomorrow that your rate drops from 10% to 7% on future sales. The employer cannot reach back and recalculate what you already closed under the 10% plan.
When Taking Commission Crosses Into Illegal
Retroactive Cuts to Earned Commission
Once commission is earned under the terms in place at the time, most states treat it as wages. An employer that rewrites the plan after the fact to reduce or erase what you already earned is effectively taking wages from your paycheck, and that is illegal virtually everywhere, whatever label the employer puts on it.
Retaliation
The FLSA prohibits employers from punishing workers for filing a wage complaint, participating in an investigation, or testifying in a labor proceeding. That protection covers any adverse action, including cutting commission, reassigning accounts, or restructuring pay to reduce earnings.3U.S. Department of Labor. Fact Sheet 77A – Prohibiting Retaliation Under the Fair Labor Standards Act Timing that lines up with a complaint you filed is exactly what investigators look at.4U.S. Department of Labor. Retaliation
Discrimination
Cutting or withholding commission based on race, color, religion, sex, national origin, age, or disability violates federal anti-discrimination laws. Title VII of the Civil Rights Act and the Equal Pay Act both cover compensation, and commission is compensation.5U.S. Equal Employment Opportunity Commission. Equal Pay/Compensation Discrimination If two salespeople close comparable deals and only one sees a commission cut that tracks a protected characteristic, that is a discrimination claim.
Commission After You Quit or Are Fired
The question after separation is whether you still get paid for deals you set in motion. Most states require payment of commission that was fully earned before your last day. The harder cases involve deals that close after you are gone.
If the agreement addresses post-termination commissions, its terms control. Some plans include forfeiture clauses saying you only receive commission if you are still employed on the payout date. In states that treat earned commissions as wages, including California, Massachusetts, and New York, those forfeiture clauses are often unenforceable for commission already earned through your work. In other states, courts may uphold them when the language is clear.
If the agreement is silent, many courts fall back on the procuring cause doctrine: bring the buyer to the table and the commission is yours, whether or not you were still on the payroll when the deal closed. Not every state recognizes the doctrine, and employers can override it with clear contract language.
Draws Against Commission
A draw is an advance paid against your future commissions. Draws come in two forms, and the difference matters:
- A recoverable draw is essentially a loan. If your commissions fall short of the draw, the shortfall carries forward as a balance the employer deducts from future commission checks until it is cleared.
- A non-recoverable draw is not. If commissions fall short, the employer absorbs the loss and you owe nothing.
With a recoverable draw, an employer can legitimately hold back future commission to recoup the advance. That is not taking away your commission; it is collecting on money already paid to you. One limit applies: the employer cannot recover the draw from your final paycheck in a way that drops your earnings below minimum wage for the hours you worked. Whichever type of draw you are on should be spelled out in writing.
The Minimum Wage Floor
Even on a pure commission plan, your employer must ensure you earn at least the federal minimum wage of $7.25 per hour for every hour worked. If your commissions for a pay period fall short of that hourly floor, the employer has to make up the difference.6U.S. Department of Labor. Handy Reference Guide to the Fair Labor Standards Act Many states set a higher minimum, and the higher rate applies. Commission-only workers often do not know this protection exists.
What to Do If Your Commission Is Withheld
Act quickly. Delay closes off options.
- Read your agreement first. Look for chargeback clauses, earning conditions, and forfeiture language. Some withholdings that feel like theft turn out to be permitted by terms you signed.
- Document everything. Pay stubs, commission statements, sales emails, the original plan, and any notice of plan changes. If a change was communicated verbally, write down what was said and when.
- Put the request in writing. Send your employer a written demand for the unpaid commission that references specific plan terms. Email creates a record; a hallway conversation does not.
- File a wage claim. Contact your state labor department or the U.S. Department of Labor’s Wage and Hour Division at 1-866-487-9243. Because the FLSA does not regulate commission payment beyond minimum wage and overtime, your state labor agency is usually the more relevant authority for a pure commission dispute.7U.S. Department of Labor. How to File a Complaint6U.S. Department of Labor. Handy Reference Guide to the Fair Labor Standards Act
- Talk to an employment attorney. Many handle wage claims on contingency, typically 25% to 50% of the recovery, so an upfront fee is not usually a barrier.
Deadlines
Filing windows vary. Under the FLSA, you have two years to bring a claim for unpaid minimum wages or overtime, extended to three years for willful violations.8U.S. Department of Labor. Back Pay Because pure commission disputes often fall outside the FLSA, your state’s statute of limitations for wage claims or breach of contract will usually control. Those deadlines differ significantly by state. Check with your state labor department or an attorney as soon as you suspect a problem. Waiting is the most common avoidable mistake in commission disputes.