Sales commissions and performance-based bonuses are a common payment structure for many Colorado employees. Under Colorado law, employers have the same legal obligation to pay commissions as they do wages. Unfortunately, not all employers can be relied upon to pay employee commissions accurately and consistently.
Three best practices to keep commissions from becoming a problem
1. Get the commission/bonus agreement in writing from your employer.
If the company refuses to put the commission/bonus agreement in writing, send an email to the company confirming the relevant commission/bonus terms. Ask the company to respond in writing if your understanding of the terms of the commission/bonus agreement is wrong.
2. Keep a copy of your written commission/bonus agreement somewhere outside of work.
Disputes about what commission an employee is owed often occur after an employee is terminated. You need to make sure you have access to your commission/bonus agreement in the event you are suddenly cut off from access to company documents.
3. Keep track of your own metrics to ensure that your company is paying you according to the commission/bonus agreement.
It is not a good practice to blindly rely on the company to pay you according to the commission/bonus agreement. Keep track of your metrics yourself to double check the company is paying you what they should. If you believe your employer is not paying you your bonuses according to the agreement, contact them immediately to address the issue.
What should I do if my employer has fallen behind on paying my commissions/bonus?
If your employer falls behind on paying you your earned commission/bonus this is a huge red flag. Immediately contact the company in writing regarding the unpaid commission. Keep track of the amount of commission you are owed and why you believe you earned the unpaid commission. If the company does not immediately pay you your commission, contact an employment law attorney who can help you fight to receive your earned commission.
My employer is trying to change the terms of how I am paid my commissions, what can I do?
Your employer cannot retroactively change your commission structure for work that has already been completed. Once you have earned commission under an existing commission plan, your employer is bound to pay it. However, your employer can change the terms of how you earn commission going forward. Your employer must give you notice of some kind about the upcoming change, but the notice does not necessarily need to be in writing. Once you learn of a change in your commission plan, you can either accept the change, seek to negotiate the change, or find a different job with a different employer.
If you have a written contract, consult the contract to see if your employer can change the terms of how you receive commission or if that violates the contract.
I’ve been terminated and my employer is refusing to pay me my earned commissions. What can I do?
You are entitled to receive commission that is earned, vested, and determinable. If the amount that you are owed is $7,500 or less, you can ask the Colorado Department of Labor and Employment for help.
If you are owed more than $7,500, contact us for advice on your rights, and for help getting your earned commissions, penalties, and attorney fees.