Paying employees a commission isn’t always an easy formula, according to Krista Cabrera of Foley & Lardner in this recent blog post. “There is no shortage of claims brought by commissioned employees alleging the employer either did not pay, or underpaid a commission due the employee,” she says. Most often, the problem exists because the company didn’t put enough forethought into defining the terms of the commission and then explaining them thoroughly to the employee. Here are some of her tips for avoiding that scenario:
• Know your state law: Some states have enacted legislation to define how commission is paid to employees, such as California and New York. These laws dictate that employers must provide employees with commission agreements in writing, containing the method in which commissions are calculated and paid.
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