Whether or not an employer can withhold earned bonuses and commissions is complex.

You should contact an experienced employment attorney if your employer has withheld earned bonuses and commissions detailed in your employment contract or in the employer’s pay policies. All states have strict statutes of limitations for wage claims, so you must act quickly to recover wages owed to you.

Rowdy Meeks Legal Group LLC can assess your wage payment claim as well as wage and overtime violations.

Understanding the Difference Between Earned Bonuses and Commissions

Earned bonuses and commissions have different criteria for when and how they are awarded.

Earned Bonus

An earned bonus is money paid to an employee as an incentive for achieving a specified goal or quota. It can be different from holiday or annual bonuses. The bonus may be formulaic or discretionary, depending upon the bonus payment criteria. The employer should have provided you the criteria you must meet to earn the bonus. Employers cannot legally withhold bonuses once employees have earned them.

Commission

Commission is a set amount of money an employee receives from selling a product or service, which is common in real estate and sales. Employees typically earn commissions according to an employment contract or payment policy. Commissions are formulaic. Most states recognize commissions as “wages” so employers must pay commissions within a set time period after the employee earns them. Employers cannot legally withhold commissions once the employee earns them.

Factors That Could Lead Your Employer To Withhold Earned Bonuses and Commissions

Several factors affect whether or not your employer can withhold earned bonuses and commissions.

Employment Agreement: Your employment agreement may specify how bonuses and commissions are earned, calculated, and paid.

Company Policies: Company policies may govern how earned bonuses and commissions are paid. These policies may outline the criteria for earning bonuses, the timing of commission payments, and conditions or limitations on eligibility.

Performance-Based Bonuses and Commissions: Earned bonuses and commissions are often linked to performance metrics like sales targets, revenue goals, and individual performance evaluations.

Discretionary Bonuses: Discretionary bonuses are not guaranteed because employers award them at their discretion. Employers have more flexibility in withholding or adjusting discretionary bonuses compared to contractually guaranteed bonuses or based on specific criteria.

Know Your Rights If Your Employer Chooses to Withhold Earned Bonuses and Commissions

Many commission and bonus agreements between employers and employees are legally binding contracts. Your employer can’t withhold earned bonuses and commissions you have rightfully earned. Review your employment agreement, paying close attention to the criteria and relevant timelines.

State and federal laws protect employees when commissions and earned bonuses are explicitly outlined in an employment contract or company policies. Employers violate wage payment laws when they refuse to pay or delay payment of earned bonuses or commissions.

Take Action

If you are uncertain whether your employer legally owes you money, an employment attorney can evaluate the situation and offer you constructive feedback and guidance.

• Keep records of your sales and performance metrics. These documents can show that you’ve met the requirements needed for earned bonuses and commissions.
• Talk with your employer or HR department about the status of your earned bonuses and commissions. Ask for a written explanation of why they are withholding or delaying your payout.
• Follow up with a written request, but keep your communication respectful and professional. You must know that the employer will use all communication against you in any follow-up litigation or other proceedings.

Some employment contracts require disputes to be resolved through mediation or arbitration. An experienced employment attorney can review your employment contract and company policies to help guide you through the best course of action.

Consult an Experienced Employment Attorney

It can be frustrating to meet the criteria for earned bonuses and commissions only to be denied the money you rightfully earned. At Rowdy Meeks Legal Group LLC, we have the experience, resources, and track record to help you get the pay you earn.

If your employer has chosen to withhold earned bonuses and commissions, contact us for a free case evaluation to assess the strength of your claim.