Law Office of Arkady Itkin
Law Office of Arkady Itkin - San Francisco Injury / Wrongful Termination Lawyer   Contact Us at (415) 295-4730
  • Home
  • Employment Law
    • Wrongful Termination >
      • At-Will Employment
      • Termination After Unfair Warnings and Write-Ups
      • Union Grievance, Workers Comp and Wrongful Termination
      • Labor Code 970 Claims
      • Promissory Estoppel and Employment Contracts
      • Implied Contract Claims
    • Discrimination >
      • Proving Discrimination
      • Age Discrimination
      • Disability Discrimination >
        • Protected Disabilities
        • Medical Leave / Disability Accommodations
        • Job Reassignment As A Disability Accommodation
        • SSI Disability Benefits and Your Court Case
        • Sample Request for Reasonable Accommodation
      • Pregnancy Discrimination
      • Race Discrimination
      • Sample Discrimination Complaint
      • DFEH and EEOC Investigations
    • Retaliation >
      • How to Prove Retaliation
      • Dealing with Retaliation While Still Employed
      • Retaliation for Complaining
      • Whistleblower Retaliation
    • Harassment
    • Defamation at Workplace
    • Prof. License Defense
    • Leaves of Absence >
      • Medical Leave as Reasonable Accommodation
      • FMLA Entitlement and Reinstatement to Work
      • CFRA Leave
      • Employers' FMLA Notice Obligations
      • Paternity Leave (FMLA)
      • Sample FMLA Leave Request
    • Wages / Overtime Claims >
      • Wage Claims
      • Employee or Contractor
      • Exempt / Non-Exempt >
        • Admistrative Exemption
        • IT Support Specialists Compensation
        • Computer Professional Exemption from Overtime
        • Recruiters / Account Executives Exemption
        • Complaining About Being Misclassified
      • Vacation Pay / PTO
      • On-Call Time Compensation
      • Deductions fr. Commissions
    • Unempl. Benefits Appeals >
      • Tips for EDD Phone Interview
      • Unemployment Benefits Appeal Hearing Representation
      • CUIAB Hearing Tips
    • Employment Law Blog
    • For Employers
  • Personal Injury
    • Five Tips For Injury Cases
    • Slip-and-Fall Injuries
    • Assault and Battery
    • Recorded Statements
    • Repairing Your Vehicle
    • Unpaid Medical Bills
    • Injury Law Blog
    • Medical Malpractice
    • Police Excessive Force
  • Practice Areas
  • About
  • Results
  • Submit Case
  • Contact
  • Resources
    • Workplace Rights Checklist
    • Deposition Tips
    • Mediation Tips
    • Effective Mediator
    • Suing Current Employer
    • Severance Agreements
    • Workplace Investigation
    • Arbitration
    • Statutes of Limitations
    • Healthy Litigation Mindset
    • Trial Tips
    • Working Remotely

When Are Deductions from Commissioned Employees Proper and Legal?  

3/29/2016

 
Picture
Generally, deductions from commissions are permitted when (1) the deductions are tied to that employee’s sales rather than general business expenses, and (2) the employee agrees to the deductions by contract. Aguilar v. Zep (2014). Even if such a contract exists, an employer cannot shift the cost of doing business to an employee. Where routine business expenses that shift the cost of doing business to the employee are deducted from the employees’ commission-based compensation, the fact that the employee consented to the practice is irrelevant and does not make such deductions legal.  

The above principle was first presented by the California Supreme Court in Kerr’s Catering case. There, the employer promised a commission of 15 percent to its sales people on all sales in excess of a certain minimum, where the employees sold food items from its lunch trucks. At the same time, the employer deducted cash shortages resulting from the failure to properly charge for the sold items as it routinely happens at jobs that involve many smaller transactions per day. The court held that those deductions were improper, observing that “some cash shortages, breakage and loss of equipment are inevitable in almost any business operation” and should be borne as a “business expense,” rather than deducted from a promised commission. This holding was applied to managerial employees in Quillian v. Lion Oil Company (1979). There, the court found that commissions similarly calculated on sales volumes and reduced by cash and merchandise shortages improperly placed the “burden of losses” on the managers and thus violated California Labor Code section 221 and other law, even though the managers had executed written contracts agreeing to this method of salary calculation.

More recently, in the Hudgins case, the court addressed an employer policy that promised salespersons commissions based on completed sales, but deducted on a pro rata basis returned merchandise that could not be traced to a particular sale or salesperson. The court found the policy “calls for deduction from earned commission wages of all sales associates a sum of money representing what would otherwise be business losses,” The court explained that this was improper under Labor Code section 221.

As the Hudgins court noted, the Legislature has recognized the employee’s dependence on wages for the necessities of life and has, consequently, disapproved of unanticipated or unpredictable deductions . . . .”  The court further stated that by enacting Labor Code section 221, and retaining it as interpreted by the courts and [the Industrial Welfare Commission], the Legislature has prohibited employers from using self-help to take back any part of ‘wages theretofore paid’ to the employee, except in very narrowly defined circumstances provided by law. In cases such as Kerr’s Catering, Quillian and Hudgins, the courts’ findings were based on the impressibility of transferring to the employee, by way of wage deductions, the financial burden of business expenses and accidental losses that otherwise would be borne by the employer. 


Comments are closed.

    RSS Feed

    San Francisco Wrongful Termination Lawyer

    Categories

    All
    Ada
    Administrative Exemption
    Age Discrimination
    At Will Employment
    Awol
    Cfra
    Constructive Discharge
    Contracts
    Defamation
    Disability Discrimination
    Disability Rights At Workplace
    Discrimination
    Employee Relations
    Feha
    Fmla
    For Employers
    Harassment
    Hostile Work Environment
    Independent Contractors
    Interactive Process
    Labor Commissioner Hearings (DLSE)
    Meal And Rest Breaks
    Mediation
    Medical Leave
    Non Compete Agreements
    Overtime Compensation
    Pregnancy Leave
    Racial Harassment
    Reasonable Accommodations
    Retaliation
    Sex/Gender Discrimination
    Sexual Harassment
    Sick Leave / PTO
    State And Public Employees
    Temp Agencies
    Tips For Employers
    Unemployment Benefits
    Vacation Time
    Vaccine Mandates
    Wage Claims
    Whistleblower Retaliation
    Workplace Disability Laws
    Wrongful Termination

    View my profile on LinkedIn

Personal Injury Law

San Francisco Personal Injury Lawyer Blog
Contact San Francisco Personal Injury Lawyer
Useful Legal Links

Employment Law

What Is Wrongful Termination?
Sample Request for Reasonable Accommodation
Sample Complaint about Workplace Discrimination 
FAQ About California Employment Law 

Law Office of Arkady Itkin

Contact Us
About
Our Practice Areas
Current Cases & Results 


Law Office of Arkady Itkin - San Francisco & Sacramento Injury and Employment Lawyer
We represent employees and employers in employment and wrongful termination cases, as well as victims of serious injuries in San Francisco, Oakland, Sacramento, San Jose, Palo Alto, San Mateo and throughout Northern California. 


57 Post Street, Suite 812, San Francisco, CA 94104; Tel. (415) 295-4730; Fax. (415) 508-3474; arkady@arkadylaw.com
Photo used under Creative Commons from Ernst Moeksis