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Can my employer cut my commission

San Diego, CA |

I work for an auto Insurance company and the company reduced my commision and then told all the agents that it would return to normal in a few months ..that never happened ..there is only a employe hand book that actually says the percentage of my commission but no this legal????

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Attorney answers 4


Employers have the right to unilaterally specify the amount of compensation, whether in the form of commission, hourly wages, or salary. The employer has the same rights to modify compensation unless constrained by a contract or union agreement (and consistent with the federally mandated minimum wage). That is true even where there is a handbook, unless the handbook constitutes a contract (which is very rarely the case) especially on compensation issues. The employer can revise and re-issue the handbook at will. Reductions in compensation must be prospective, not retroactive, and that sometimes raises issues for commissioned employees, but that does not seem to be the case in your matter. Your facts suggest that the company has been pressed financially and that it chose to reduce compensation rather than the work-force. That choice is the employer's to make unless there is a contrary collective bargaining agreement with a union.

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Good analysis by Ms. McCall. So, you will want to look at the prosepective and retroactive aspects of when the "right" to the commission was vested. You may still be owed money under the "old" commission schedule. You will want to prepare a chronology (history) with the relevant dates and facts and then have an attorney review the matter to give you a course of action that you can take without making your employer adversely react...which would not be a good thing.

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Both of the prior answers are accurate and informative. My only concern with these answers is they seem to not respond to the promise that commissions would "return to normal in several months." That promise needs to be fleshed out more here as I would guess folks have relied upon it and done so to their detriment. Was the promise in writing and/or any more specific than noted above?


Generally, promises made in an employee handbook are enforceable. Howeever, I wold want to know more about the circumstances and the company's reasons for cutting the income.