Sales Commission Withholding & Post-Termination Clawback Legality Checker
Audit your written Commission Plan against state wage laws to determine if your employer illegally forfeited earned commissions or unlawfully deducted 'draw' clawbacks.
1. Enter Your Case Details Runs in your browser
2. Your result Live Output
- Statutory Written Contract Violation: Employer NEVER gave me a signed written Commission Agreement stating how commissions are calculated (Cal. Lab. Code § 2751) — California and New York require commission agreements to be in writing and signed, with a receipt copy given to the employee.
- Unconscionable Forfeiture Clause: I closed the sale and completed all my duties before leaving, and the company refused to pay solely because I left before the client paid — When the salesperson has done all required work to earn the sale, pure 'must be employed on payout date' forfeiture clauses are routinely challenged.
- Illegal Wage Deduction (§ 221): Employer deducted previous commission advances/draws from my base minimum wage or final paycheck without lawful authorization — Under Cal. Lab. Code § 221, employers cannot claw back recoverable draws unless expressly agreed in writing and never below minimum/base wage.
- Retroactive Wage Theft: Employer retroactively changed the commission rate AFTER I already closed the deal — Employers can only modify commission plans prospectively after written notice, never retroactively on deals already closed.
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3. How the rule works
Who this is for
Salespeople whose commissions were withheld, cut or clawed back, especially after leaving a job, and sales managers checking whether a plan is enforceable in California or New York.
Commission disputes usually turn on the wording of the plan, so have it in front of you.
What to have ready
- The signed commission plan for the period in question.
- Deal records with signing, invoicing and payment dates.
- Pay stubs showing commissions paid and any deductions.
- Your termination or resignation date.
The rule
California Labor Code § 2751 requires a commission agreement to be in writing, set out how commissions are calculated and paid, and be signed with a copy given to the employee. If a written commission contract expires and the employee keeps working, its terms are presumed to remain in effect until a new agreement or the end of employment. Section 221 makes it unlawful for an employer to take back wages already paid. A commission is generally earned when the conditions in the plan are met, so a plan can lawfully make payment depend on events such as customer payment if it says so clearly.
New York Labor Law § 191(1)(c) requires a written agreement for commissioned salespeople, and § 191-c protects independent sales representatives: commissions owed at termination must be paid within five business days of when they are due, and a willful failure allows double damages plus attorney's fees. Advances against future commissions, or 'draws', can be recovered only as the agreement allows and not from minimum wage.
Read the official text:
Worked example: who earned the commission?
Raj's plan pays 8% of contract value 'when the customer signs'. He closed a $50,000 deal on May 20 and resigned on June 1. The company refused to pay because the customer paid on June 15.
Commission under the plan = 8% x $50,000 = $4,000 Condition in the plan = customer signature (met May 20) Customer payment = not a condition in this plan Result = earned before Raj left; due with final pay If the plan said 'when payment is received', the answer could differ
Common mistakes
- Arguing fairness instead of the plan's wording. Courts enforce clearly stated conditions.
- Not keeping the signed plan. Ask for a copy each year; California requires the employer to give you one.
- Treating every deduction as a clawback. Reversals for cancelled deals may be allowed if the plan says so.
- Missing final pay deadlines, which can add waiting time penalties in California.
Limits of this tool
- Commission law varies by state and many states rely only on contract law.
- Independent contractors and employees are treated differently in New York.
- The checklist does not interpret your specific plan language.
Sources were last checked in October 2026. Statutes are amended often; if the official text differs from this page, the official text controls.
4. Clear Next Steps & Statutory Action Plan
- Export your deal records with signing, invoicing and payment dates before access ends.
- Match each disputed deal against the plan's conditions for earning a commission.
- Request a written accounting and, if needed, file with the state labor agency.
5. Frequently Asked Statutory Questions (Cal. Lab. Code § 2751 & § 221; N.Y. Lab. Law § 191-c)
Can my employer refuse commissions because I left?
Only if the plan clearly makes continued employment a condition and the condition is lawful. Commissions already earned under the plan's terms must be paid.
What if my plan expired?
In California, § 2751 presumes the expired plan's terms continue until a new one is signed or employment ends.
Can a draw be clawed back from my paycheck?
Only as the written agreement allows, and never in a way that takes pay below minimum wage or takes back wages already earned.