Commission-based employees are common in industries like sales, real estate, and finance. While their compensation structure differs from hourly or salaried workers, they are still entitled to important legal protections. In New York, wage laws provide safeguards to ensure commission-based employees are paid fairly and on time. Understanding these protections can help workers identify violations and take appropriate action.

What Is a Commission-Based Employee?

A commission-based employee earns income based on performance, typically through sales or completed transactions. In some cases, commissions make up the entirety of the employee’s pay, while in others, they supplement a base salary or hourly wage.

Under New York law, many commission-based workers are still considered employees rather than independent contractors, meaning they are covered by wage and hour protections.

Written Commission Agreements Are Required

New York law requires employers to provide commission-based employees with a written agreement outlining how commissions are calculated and paid. This agreement must clearly explain:

• The method for calculating commissions
• When commissions are earned
• Payment schedules
• Any conditions or limitations on commission payments

Both the employer and employee must sign the agreement, and the employer must keep it on file. If an employer fails to provide a written agreement, disputes may be resolved in favor of the employee’s understanding of the terms.

Minimum Wage Protections Still Apply

Even if an employee earns commissions, New York minimum wage laws still apply. Employers must ensure that commission earnings meet or exceed the applicable minimum wage for all hours worked.

If commissions fall short, the employer may be required to make up the difference. This is especially important for employees whose income fluctuates based on performance or market conditions.

Overtime Rules for Commission-Based Workers

Commission-based employees may also be entitled to overtime pay, depending on their classification. Non-exempt employees must receive overtime compensation for hours worked beyond 40 in a workweek.

Some employees may qualify for exemptions under federal and state law, but misclassification is a common issue. Employers cannot avoid overtime obligations simply by paying employees on a commission basis.

Timely Payment of Commissions

New York law requires that earned commissions be paid within a reasonable time according to the agreed-upon terms. Once a commission is earned under the contract, the employer cannot withhold payment arbitrarily.

If an employee leaves a job, they may still be entitled to commissions earned before termination, depending on the terms of the agreement.

Protection Against Wage Theft

Commission-based employees are protected under New York’s wage theft laws. Employers who fail to pay earned commissions, delay payments, or manipulate commission structures may be in violation of the law.

Employees can file complaints or pursue legal action to recover unpaid wages, and in some cases, they may also recover additional damages and attorneys’ fees.

How Legal Assistance Can Help

Disputes involving commissions can be complex, especially when agreements are unclear or incomplete. Legal guidance can help employees understand their rights, review commission agreements, and take action if wage laws have been violated.

At LAWYERFORWORKERS, we can provide legal assistance to the New York City public and help ensure that employees are treated fairly under the law.