The potential to earn a commission can be an excellent incentive for employees that are responsible for building your business. Whether they find new clients or increase sales, they have a direct role in your company’s profits.
There are times, however, when there are gray areas. It may not be clear whether an employee should receive a commission for their performance.
This is what you should consider before you withhold an employee’s commission.
Check the employee agreement
During the hiring and onboarding process, you and your new employee talk about compensation and how they will contribute to your business. The employee agreement should outline both what the employee will do and their commission structure.
Keep in mind that if you have employees who change tasks frequently or who have transferred to a different department, you should update their employee agreement.
When you talk to your employees about their employment agreement, make sure they understand the commission structure and when they can expect to receive payment. The better your employees understand the agreement, the more they can focus on helping you build your business.
The bottom line is compensation agreements, wage theft prevention act notices and any other document that details compensation must clearly explain what, how and when employees will be paid.
You must pay earned commission
When you have an agreement with your employees to pay commission, you need to pay it,consistently with the terms of the agreements.. The employment agreement holds you to a specific compensation plan, and employees are entitled to their earned pay.
Remember, even when employees quit or are terminated, you still must pay their commissions if they have been earned. In most cases, in New York, you have one month to pay commissions to employees, even if they no longer work for you.