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1099 in California. Commission on bounced checks? California

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  • 1099 in California. Commission on bounced checks? California

    Hi there,

    I'm a 1099 computer services contractor working for a franchisee in Southern California. I get paid 40% commission on all weekly funds "collected (not billed)" [verbatim from offer letter]. I get a 10% bonus at $1,500 and a 15% bonus at $2,500 collected weekly.

    Business has been horrible lately, and I've been hanging around essentially making no money (I signed a noncompete) hoping it would pick up. This last week, I only barely managed to bring in the $1,500 necessary for my much-needed bonus.

    I come in Monday to find out that one of the checks I collected last week bounced, putting me $300 under the amount I needed. I asked how it would affect my bonus, to which my boss replied "if I don't get paid, you don't get paid."

    Considering that debt collection is not at all in my job description, I'm pondering the legality of withholding payment for a completed job because the funds did not clear. I did everything I was supposed to do; arrive on time, perform the work requested, and collect payment. As far as I'm concerned, their bounced checks should not affect me, but I am very interested to see if the letter of the law backs up this ethical viewpoint. I'd imagine it hinges on the definition of the word "collected" -- they may not have collected the cash, but I finished the job and collected payment.

    I would very much be appreciative of anyone who can cite law or precedent. I don't want to march in there threatening to quit if the law really isn't on my side, although considering how the phone hasn't been ringing at all lately, it might not be a bad tactic to ask them how I benefit from being their contractor at all.

    Thanks!
    Last edited by spindrift; 06-22-2009, 06:33 PM.

  • #2
    You have several problems. The big one is that you are not an employee, and not subject to labor law. A so-called "1099" means that you are classified (correctly or not) as an independent contractor (IC). An IC is subject to contract law only, meaning lawyers and the courts.
    http://www.dol.gov/esa/whd/regs/compliance/whdfs16.pdf

    Past that, even if you were an employee, and even though you are in CA (one of the most employee friendly states in the country), CA does not have a problem per se with making commissions based on payments actually received. This is actual a very common way of doing things. Now if you were really an employee, whether or not you could legally be paid on a commission only basis is another issue. Legally very few employees can be paid on a commission only basis that ignores actual hours worked.
    http://www.dir.ca.gov/dlse/Manual-Instructions.htm
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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