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Wage Claim Conference information - California

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  • Wage Claim Conference information - California

    Hello everyone,

    I'm going to try very hard to make this story as short and concise as possible. I have a wage claim conference scheduled in a couple of weeks in California, and I was hoping to get some advice from folks here who have been through the process, or know something about it. I'd like to know a bit about how to prepare.

    The background:

    I worked for a very small recruiting agency for about 9 months beginning August, 2012. The compensation is base salary + commission. When I started, I received terms of commission, which I signed. On it, there was no mention of what happens when an employee resigns (like how to pay out commissions and bonuses and such). The commission is structured in a way that escalates in percentage (i.e., tiers) as the employee bills more gross revenue. For example, for the first $10K in revenue billed and received, the employee gets 5%. From $10,001 to $20K, it's 6%, and so on. Also described were the bonus payouts, with targets to meet. For example, when $50K in revenue is received, there would be a bonus payout of $2K.

    In December of the same year, new terms came out on paper and distributed to every recruiter which we did NOT have to sign (and didn't, obviously). Still, there was no language about payments of commission after employment, but some of the bonus targets and amounts changed. In June 2013, yet another set of terms came out through e-mail, this time with language regarding what happens to commission payments after an employee leaves. This version was also NOT signed. The terms stipulated that after someone leaves, regardless of what "tier" the employee was under, all outstanding commission would be paid out at the 10% tier, and bonuses are forfeit. There was no language that said this version would supercede previous versions.

    The claim:

    In March, April, and May of 2013, I closed 3 deals, 1 in each month.

    I left on July 2nd in the morning, a few weeks after the latest terms were distributed. Outstanding commissions on the table are all from the 3 deals closed in March - May, and I was sitting somewhere in the 25% - 30% commission tier, with a bonus target that would be met once revenue from these deals was received from the client.

    The owner of the agency is, of course, claiming that I chose to resign knowing these new terms, so I am only entitled to 10% and no bonus payout. My argument is that all the work was performed before the new commission terms came out with the new stipulations, and even then, I never signed it anyway, which, I have learned, is a California law enacted on January 1, 2013 that required all new compensation terms be acknowledged and signed by the employee.

    Also, he didn't pay me for the 1 day (or 2?) I worked in July until mid-August, so I'm claiming a waiting time penalty of 30 days, using the formula I found on the Department of Labor Standards Enforcement website for employees on a salary + commission basis, calculating what my average daily rate of pay is for the last three months of employment and multiplying it by 30 days.

    The questions:

    I read on-line that I should be prepared to address any weaknesses in my position. I don't really see very many (but then again, I'm not exactly being objective). Yes, I was aware of the new terms, but at the time the work was performed, I was not aware of them because these terms did not exist.

    One of the candidates I placed at the hospital did not actually start until after I left (the deal closed in May), and I'm thinking he could argue that I did not complete the entire work in order to qualify for the commission. However, he has repeatedly told all recruiters that billing the client is not a part of our job, so after I had all the May candidate sign the paperwork for her employment, the extent of my job was complete.

    And on that note, I'm thinking he could argue that I am not eligible for the bonus because at the time I left, the company had not received the amount of revenue from the deals I closed in order to meet that target. But again, since I am not responsible for AR, and since the work was completed, on my part, well before these new terms came into existence, they should not be retroactively applied.

    I guess what I'm hoping to hear are objections to what I am claiming. My conference is on 10/24, so I'm trying to collect as much information as I can before then so I can go in prepared.

    Thanks in advance to everyone who read this novel! I can't imagine it was that thrilling. . .


  • #2
    OK, now that it's posted, I see that I was not as brief as I wanted to be. Apologies!!


    • #3
      I am not in CA, but it does sound like you have a strong case due to the fact that at the time they were earned, there was no stipulation on only paying if a current employee. Usually any change must be prospective so it would affect any commissions earned after the change. A lot will depend on the wording of the document(s) over the time span so if it is a large amount, I would consider running it by an attorney.

      However, one question just because I am curious...if you had not left, when would they have been paid out? Timing might play a bit of a factor in your favor if it was supposed to be paid out just a few days after you left....That is you would have stayed knowing it was coming soon....


      • #4
        Download the CA-DLSE manual and read the chapters on commissions. CA rules on commissions differ signficantly from federal law and the law of other states in this area.

        Your 10% rule could be legal if the policy was implemented correctly, communicated prior to work being done and followed correctly. A lot of this is very technical and specific to both the rules articulated in the CA=DLSE manual and the exact wording of all related commission documents (which no one on this website has read).
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)


        • #5
          Hey, thanks for the reply. The question about when commissions would be paid doesn't really have a good answer. Clients are supposed to pay 30 days after the candidate begins employment, but that doesn't always happen. Once the client pays, then the recruiter gets paid at the end of that month.

          The owner of the agency handles all AR and billing, and he doesn't really keep the recruiters very well informed of the status. We are told to just wait until he tells us the client has paid. So, for example, the candidate who began employment in March still hadn't been paid out in June, and I really had no way of knowing when the client intended to pay.

          And, I didn't exactly have a choice to leave, so it wasn't like I could wait around until payment arrived. The owner found out I was looking for another job and gave me the choice to resign or get terminated. I chose to resign, but it wasn't really a choice. . .


          • #6
            If I had written the commission policy (and I have), it would make the commission calculated and due based on final receipt of funds. It is very difficult in CA to legally say "Whoops" and get overpaid wages, especially commissions back. But CA-DLSE is fine with conditional wages (including commissions) where one of the conditions is contigent on non-reversalable conditions, such as paying the involce, or the employee not leaving for a certain period. It would be legally safer to make payments on condtions vested. Example, if newly placed employees have to work 2 years to get a maximum commission, it may be possible to earn something say after a year, and CA-DLSE would likely require that the earned portion be considered a due wages and paid in a timely manner (say quarterly).
            "Reality is that which, when you stop believing in it, doesn't go away".
            Philip K. **** (1928-1982)


            • #7
              Hi DAW,

              Yes, the commission terms loosely say that upon receipt of revenue, the commissions will be paid out. That language has been consistent in all the terms. However, never did any language appear that stipulated what happens after an employee leaves until the latest version, which he is applying to work that was done prior to it coming out.

              That, and the fact I never signed this newest version, are my main points of contention.


              • #8
                There is no legal requirement that you sign the commission agreement, just that the employer notify you of any changes, and that changes under Common Law are on a go forward basis only.
                "Reality is that which, when you stop believing in it, doesn't go away".
                Philip K. **** (1928-1982)


                • #9
                  Hey DAW, good morning. Can you clarify your comment against this section of CA's labor code, which was enacted 1/1/2013? I'm reading this as a requirement that the new terms be signed on both sides, but am I mistaken?

                  2751. (a) Whenever an employer enters into a contract of employment
                  with an employee for services to be rendered within this state and
                  the contemplated method of payment of the employee involves
                  commissions, the contract shall be in writing and shall set forth the
                  method by which the commissions shall be computed and paid.
                  (b) The employer shall give a signed copy of the contract to every
                  employee who is a party thereto and shall obtain a signed receipt
                  for the contract from each employee. In the case of a contract that
                  expires and where the parties nevertheless continue to work under the
                  terms of the expired contract, the contract terms are presumed to
                  remain in full force and effect until the contract is superseded or
                  employment is terminated by either party.
                  (c) As used in this section, "commissions" has the meaning set
                  forth in Section 204.1. For purposes of this section only,
                  "commission" does not include any of the following:
                  (1) Short-term productivity bonuses such as are paid to retail
                  (2) Temporary, variable incentive payments that increase, but do
                  not decrease, payment under the written contract.
                  (3) Bonus and profit-sharing plans, unless there has been an offer
                  by the employer to pay a fixed percentage of sales or profits as
                  compensation for work to be performed.


                  • #10
                    I am not familar with this particular CLC change. My prior answer is specific to the old Common Law rules, and not the recent CLC change effective 2013. I would start with the current version of the CA-DLSE manual and read the commission chapter. CLC means whatever CA-DLSE says it means, the chapter is what CA-DLSE uses to enforce wage claims through CA-DLSE, and unless you are going through the courts directly, the CLC wording by itself is not adequate. The CA-DLSE includes relevant court and administrative rulings.
                    "Reality is that which, when you stop believing in it, doesn't go away".
                    Philip K. **** (1928-1982)


                    • #11
                      Hey Daw,

                      Thanks for the reply, and the information. This is just what I was hoping to learn here. I'll take a look at the DLSE enforcement manual and pull out language relevant to my case and have it ready with me when I go to the conference.



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