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Commission chargeback against base salary for exempt employee? Illinois

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  • Commission chargeback against base salary for exempt employee? Illinois

    I was of the belief that a chargeback that is for the company's benefit cannot be assessed against an exempt employee's base salary. Meaning that if an exempt employee's base salary is $500/week and his commission earned was $250 but there was also a $500 chargeback, the company could only charge back $250 on that paycheck so as to leave his base salary untouched. The remaining $250 'owed' to the company would have to be charged back against subsequent commissions. Is this correct?

    And would this be affected by the commission agreement signed by the employee that states that all chargebacks are made to the following paycheck including base salary?

  • #2
    See if these help.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)


    • #3
      There is something wrong with my adobe acrobat reader at home, so I cannot read the links DAW provided, but I am sure they are helpful.

      If the OP is exempt under anything but the outside the outside sales exemption, the salary must remain intact. Not so for outside sales reps who have no minimum wage or ovetime requirements.

      I am confused, though, about a $250 commission resulting in a $500 chargeback.

      What MAY have happened (pure speculation on my part) is that the OP had a draw against commission of $250, received a $500 commission and netted $250. Then, when the deal fell through, the OP owes $500.

      If the OP is an outside sales rep, there is no minimum wage or overtime and the company could collect the entire chargeback. Starting draw $0. Draw for the week $500. Commissions due $0. Chargebacks owed $500. Company pays $0. I would not be a happy camper to find out that my draw against commission arrangement resulted in no pay for the week.

      If all of the above is reasonably accurate, work with the employer to make sure you get some money to make ends meet.
      Last edited by ScottB; 02-09-2008, 07:47 AM.
      Senior Professional in Human Resources and Certified Staffing Professional with over 30 years experience. Any advice provided is based upon experience and education, but does not constitute legal advice.


      • #4
        Agreed. The pointers I referenced are only good for the Admin, Exec, and Prof exceptions. The Outside Sales exception is an entire other set of rules which does not include the $455/week salary.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)


        • #5
          Response to questions above

          Employees are salaried exempt outside salespeople. Their compensation agreement provides for chargebacks if customers return or cancel within 90 days. So it sometimes happens that chargebacks of commissions paid in preceeding 3 months can exceed their commissions earned in the current month plus the base salary. So I have (rarely, thankfully) seen an instance where one of these employees receives no paycheck at all for that pay period. I was concerned with the legality of commission chargebacks being applied against the base salary as well.

          Thanks for all the links!


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