You did everything right. You sourced the lead, ran the process, dealt with the demos, the internal approvals, the legal reviews, and the procurement delays. You closed the deal. Then, after the fact, the commission you expected to be paid either vanished or was suddenly “no longer owed.”
This is not about poor performance. It is not a misunderstanding. It is not a normal business dispute. It is something I see repeatedly in California commission theft cases. What surprises most people is who is doing it. The companies pulling these scams are some of the biggest, most successful, and most recognizable companies out there. These are not fringe employers. These are household names. And I get calls all the time from high-earning commission salespeople who closed real deals, generated real revenue, and then watched their employer (illegally) change the rules after the fact so the company could keep the money instead of paying the employee who earned it. Under California law, that kind of conduct is not just unfair. In many cases, it is unlawful.
I’m Matt Ruggles, and I’ve been practicing employment law in California for more than 30 years. I’ve represented countless employees whose employers tried to screw them out of commissions they earned by hiding behind retroactive plan changes, must-be-employed clauses, endless delays, or commission plans that collapse the moment anyone actually reads them. I’ve seen these tactics used over and over again, and they are not accidents. Employers know exactly what they are doing when they try to avoid paying commissions after a deal closes.
I wrote this blog to help people understand the common ways employers try to get out of paying commissions after the sale is done. There are a handful of scenarios that come up again and again, no matter the industry or the company. Once you know what those scenarios are, it becomes much easier to recognize when your employer crossed the line and why California law may be on your side.
If your commissions are unpaid or disputed, resolving the issue often depends on the written plan and the law. To learn more about this subject, read my blog: How Do I Resolve an Unpaid Commission Dispute in California?
When a Commission Becomes an Earned Wage Under California Law
Everything in a commission dispute turns on one question: when did the commission become earned? That is the moment the law stops treating the payment as a contractual possibility and starts treating it as a wage.
Under California law, commissions become earned wages once the employee satisfies the conditions set out in the applicable commission agreement. Those conditions vary by employer and industry, but the principle does not. Once the employee does what the plan requires, the commission is earned. At that point, the commission is no longer negotiable, discretionary, or subject to employer creativity. It becomes a wage.
That distinction matters because California treats earned commissions the same way it treats hourly pay or salary. Once a commission is earned, it must be paid timely. It cannot be forfeited retroactively. It cannot be withheld as leverage. And it cannot be reclassified out of existence by clever wording, post-hoc interpretations, or so-called “clarifications” of the plan. Employers do not get a second bite at the apple after the employee has already performed.
This is where many employers try to muddy the water. They describe commission disputes as “contract issues” or disagreements over plan interpretation. That framing benefits the employer because it makes the dispute sound technical and debatable. California law does not see it that way. Once a commission is earned, the dispute stops being about contract interpretation and starts being about wages. And California wage laws are not suggestions. They are strict, employee-protective rules that employers violate at their peril.
The most common trick employers use is collapsing the difference between when a commission is earned and when it is paid. Those are not the same thing. A commission can be earned weeks or months before it shows up on a paycheck. Payment timing does not control earning. If the earning event has occurred, the commission is already a wage, even if the employer delays payment to a later payroll cycle. Employers routinely exploit this confusion to justify nonpayment, especially after termination. California law does not reward that sleight of hand.
This is also why labels do not matter. Calling a commission an “advance,” a “draw,” a “bonus,” or a “conditional payment” does not change its legal character once the employee has satisfied the earning conditions. Courts and enforcement agencies look at substance, not labels. If the compensation ties to objective performance and the employee performed, the commission is earned. At that point, it belongs to the employee, not the company.
California law defines wages broadly to include earned commissions, not just hourly pay or salary. The California Labor Code makes clear that once compensation is earned, it must be paid and cannot be taken back through after-the-fact deductions or forfeiture schemes. Employees can review these protections directly in California Labor Code section 200, which defines wages, and Labor Code section 221, which prohibits unlawful wage deductions.
If you are unsure whether your pay qualifies as earned wages, California law provides clear guidance. To learn more about this subject, read my blog: What are Earned Wages in California?
If you closed a deal and your employer is now refusing to pay the commission, you do not have to guess whether that is legal. Call me directly at the Ruggles Law Firm at 916-758-8058 and we can talk through what happened and whether California law is on your side.
What Makes a Commission Earned Under California Law
Once you understand that an earned commission becomes a wage, the next question is practical, not theoretical: what actually makes a commission earned? The answer starts with the commission plan, but it does not end with whatever story the employer tells after the fact.
In California, a commission becomes earned when the employee satisfies the objective conditions set out in the applicable commission agreement. Those conditions vary by employer, but they almost always tie to identifiable business events, not vague future possibilities. Employers like ambiguity. The law does not.
Most commission plans define earning around concrete milestones that mark the completion of the employee’s role in the sale. When those milestones occur, the commission crosses the line from conditional compensation to earned wages.
If your commissions keep shrinking due to chargebacks, there may be a legal way to challenge them. To learn more about this subject, read my blog: How to Fight Illegal Commission Chargebacks Like an Employment Lawyer
Common Events That Trigger Earned Commissions in California
In real-world commission plans, earning typically occurs at one or more of the following points:
Event #1: Execution of the customer contract.
Many plans provide that a commission is earned once the customer signs the agreement. At that point, the sale is complete from the employee’s perspective. The employee did the job they were hired to do.
Event #2: Receipt of customer payment.
Some plans tie earning to when the company receives payment from the customer. Once the company gets paid, the employee’s commission is no longer speculative. The revenue exists.
Event #3: Delivery, installation, or go-live.
In longer sales cycles, plans often define earning at delivery, installation, or a go-live date. Once the product ships or the service launches, the employee’s role in closing the deal is finished.
Event #4: Customer acceptance.
Some plans require formal acceptance by the customer. Once acceptance occurs, the employer cannot pretend the sale is still in limbo.
Event #5: Expiration of a return or cancellation window.
Retail and subscription models sometimes delay earning until a defined return or cancellation period expires. The key point is that the window must be finite and clearly defined. Open-ended delays do not count.
If one of these earning events occurs, and the employee satisfied the plan’s requirements, the commission is earned. At that point, it becomes a wage protected by California law.
Earned Does Not Mean “Paid Yet” Under California Law
This is where employers deliberately confuse the issue.
California law draws a clear distinction between when a commission is earned and when it is paid. Those are not the same thing. A commission can be earned long before it shows up on a paycheck. Employers often collapse these concepts to justify non-payment, especially after termination.
A plan may say commissions are paid monthly, quarterly, or after accounting reconciliation. That affects timing. It does not undo earning. Once the earning event occurs, the commission already belongs to the employee. Delayed payment does not convert an earned wage back into a conditional promise.
This distinction becomes critical when an employer fires an employee, lays them off, or pressures them to resign before the next commission cycle. Employers routinely argue that because payment had not yet occurred, nothing was owed. California law rejects that logic when the commission was already earned under the plan.
California law also regulates when wages must be paid, regardless of how an employer structures payroll cycles, as explained in California Labor Code section 204, which governs the timely payment of earned wages.
If you are curious about how a compensation plan works in California and want a more detailed discussion of what to look for and where employers commonly cross the line, read my blog: What Is a Compensation Plan in California?
Labels and Excuses Do Not Control Under California Wage Law
Employers often try to avoid this reality by changing labels. They call commissions “advances,” “draws,” “incentives,” or “bonuses” after the dispute arises. Labels do not matter. Substance does.
If the compensation ties to objective performance and the employee met the earning conditions, the commission is earned. Once earned, it becomes a wage. Employers cannot reclassify it out of existence because they regret the size of the payout or the timing of the employee’s departure.
Once the earning event occurs, the legal analysis changes completely. The employer no longer gets to debate fairness, discretion, or intent. The question becomes whether the employer paid a wage it was legally required to pay.
California law requires commission agreements to be in writing and does not allow employers to avoid wage obligations through vague or shifting terminology, a requirement set out in California Labor Code section 2751.
If your employer refers to commissions as advances, it is important to understand what that means legally. To learn more about this subject, read my blog: What is an Advanced Commission in California?
What follows are the most common ways employers try to avoid that reality after a commission is earned, and why those tactics so often fail under California law.
Five Common Employer Tactics Used to Avoid Paying Commissions in California
Once a commission is earned, the law is supposed to make things simple. Pay the employee. What happens instead is predictable. Employers reach for the same handful of tactics to avoid paying commissions after a deal closes. The language changes. The excuses change. The strategy does not.
These tactics are not just theoretical. They are the same issues the California Labor Commissioner investigates when employees file wage claims involving unpaid commissions. The Labor Commissioner, which operates under the California Department of Industrial Relations, has authority to enforce California’s wage laws when employers refuse to pay earned commissions.
These are the five tactics I see most often, and why they tend to collapse once the law and the facts are put on the table.
Employer Tactic #1: “You Must Be Employed at the Time of Payment” Clauses
This is the classic move.
The sale closes. The commission becomes payable on a later payroll cycle. Before that payment date arrives, the employee gets terminated, laid off, or pressured to resign. The employer then points to a clause in the commission plan and says, “Our plan requires you to be actively employed at the time of payment.”
On paper, that sounds neat. In practice, it often fails.
California courts focus on when the commission was earned, not when payroll happened to run. If the employee satisfied all material conditions required to earn the commission before termination, a clause that wipes out payment simply because the employer fired the employee operates as a forfeiture of earned wages. Courts scrutinize those clauses closely.
The critical distinction employers try to blur is this: payment timing rules do not override earning events. A plan can control when money is paid. It cannot erase wages that already belong to the employee.
From a strategy standpoint, these clauses often look strong until the employer has to explain why firing the employee conveniently avoided a large payout. That explanation rarely holds up under scrutiny.
If any of these tactics sound familiar, there is a good chance your employer crossed the line. You can call me at the Ruggles Law Firm at 916-758-8058 to discuss your situation and get a clear, realistic assessment of your options.
Employer Tactic #2: Retroactive Commission Plan Changes After the Sale
This tactic shows up after a large deal closes.
The employer announces a “clarification,” a “reinterpretation,” or a “temporary adjustment” to the commission plan. Sometimes the change arrives in an email. Sometimes it shows up in a revised plan circulated months later. Either way, the employer applies the new rules to deals that already closed.
That does not work under California law.
Commission agreements must be in writing, and material changes must apply prospectively. Employers can change commission plans going forward. They cannot rewrite history after performance is complete. Once the employee earns the commission under the plan in effect at the time, the employer does not get to change the rules to reduce or eliminate payment.
Courts view retroactive changes skeptically, especially when they surface only after a large commission comes due. The timing usually tells the story, and it usually does not help the employer.
If your employer owes you unpaid wages but you are still employed, California law may still allow you to take action. To learn more about this subject, read my blog: Can I Sue My Employer for Unpaid Wages While Still Employed?
Employer Tactic #3: Declaring the Sale “Not Final” to Delay Commission Payment
Some employers do not deny the sale. They deny its finality.
They say the customer has not paid yet. Revenue has not been fully recognized. The contract might terminate. There are downstream issues. Months pass. Sometimes years pass. The commission stays “pending.”
California law does not allow employers to impose illusory or indefinite conditions that prevent commissions from ever vesting. While employers can tie earning to reasonable milestones, those milestones must be objective, finite, and clearly defined.
If the employee completed their role in closing the deal, the employer cannot hold the commission hostage to events that may never resolve or that exist entirely outside the employee’s control.
Employer Tactic #3A: The Control Question California Courts Focus On
Courts often cut through this tactic by asking one simple question: after the sale closed, was there anything left for the employee to do?
If the answer is no, the employer’s position weakens fast. Courts routinely find commissions earned where the employee completed the sales work and remaining contingencies involved billing, accounting, customer behavior, or internal company processes. Employers cannot use those factors as permanent excuses to avoid paying wages.
Employer Tactic #4: Reclassifying Earned Commissions as “Discretionary Bonuses”
This tactic usually appears once a dispute arises.
Suddenly, the employer claims the payment was discretionary. Management approval was required. Nothing was guaranteed. The same compensation that looked like a commission when the deal closed now gets labeled a “bonus.”
California law looks past labels. Courts focus on substance.
If the compensation ties to objective performance metrics like sales, revenue, or deal completion, it is a commission. Calling it a bonus does not change its legal character. Employers do not get to convert earned wages into discretionary payments simply because the number turned out larger than expected.
From a legal perspective, this argument tends to fall apart quickly once the compensation structure and performance criteria come into evidence.
Employer Tactic #5: Claiming You Did Not “Own the Deal” After It Closed
This tactic shows up most often in enterprise sales environments.
After the deal closes, the employer reassigns credit, claims shared ownership, or reduces the commission based on alleged “partner contribution” or executive involvement. The employee who ran the deal suddenly owns only part of it, or none of it at all.
If the commission plan defines deal ownership and the employee satisfied those requirements, retroactive reallocation is unlawful. Employers cannot strip earned commissions by invoking vague notions of teamwork or management discretion after the fact.
California courts and enforcement agencies view broad “management discretion” clauses skeptically when employers use them to take back earned wages. Once a commission is earned, it cannot be shaved down to reward internal politics or executive ego.
If you want to see how large commission claims are actually recovered, a real case study can be instructive. To learn more about this subject, read my blog: Recovering Unpaid Commission in California: A 1M Case Study
Why Employers Take the Risk of Withholding Earned Commissions
Employers take these risks for a simple reason. Most employees never challenge them.
I talk to a lot of commissioned employees who know they are getting screwed. They know the deal closed. They know the revenue came in. They know the commission should have been paid. What stops them is not confusion about the work they did. It is fear about what happens next.
When you are employed and earning a high income, you are dependent on that job. You built that income stream over years. You may have specialized yourself into that role, that industry, that company. You worry about what happens if you rock the boat. You worry about retaliation. You worry about getting labeled as “difficult.” You worry about how long it would take to replace that income, or whether you ever will. Those concerns are real, and employers know it.
That imbalance is exactly why this behavior persists. Confusion, delay, and attrition all benefit the employer. If the employee hesitates, the company keeps the money. If the employee complains internally, the company drags its feet. If the employee waits too long, leverage fades. From the employer’s perspective, the downside risk is low because most people never push the issue far enough to make it uncomfortable.
It is relatively rare for someone to contact me while they are still employed unless the situation has reached a breaking point. Most people who call are frustrated and angry, but also cautious. They understand that litigation puts them in an adversarial position with their employer, and they do not take that lightly.
The people who ultimately move forward tend to fall into a few categories. They are at the tail end of their career and do not care anymore. They are financially secure enough to absorb the fallout. Or the amount of money at stake is so extreme that they have no realistic choice but to act.
Here is the hard truth. Continuing to work for an employer that steals your wages is not stability. It is exposure. The longer it goes unchallenged, the more emboldened the employer becomes. The calculation changes only when legal exposure becomes real. When that happens, the same companies that acted confident and dismissive often become very interested in resolving the problem quickly.
Three Critical Steps to Take If Your Commission Is Withheld
When a commission dispute starts, what you do next matters as much as what already happened. Most employees hurt their own position without realizing it. These three steps separate cases that resolve cleanly from cases that drag on or collapse.
Step #1: Preserve the Evidence
Commission cases are document-driven. The paper usually decides the outcome.
If you think a commission is being withheld or taken back, start saving everything immediately. That includes every version of your commission plan, your offer letter, emails discussing compensation, internal dashboards, CRM records, deal approvals, payment statements, and any documents showing when the deal closed and revenue was booked.
Do not assume your employer will preserve these records for you. They often do not. Sometimes they “lose” them. Sometimes they quietly revise them. Your job is to lock down what exists now, before access disappears.
Most strong commission cases are built almost entirely from the employer’s own documents. But that only works if the employee preserves them early.
Step #2: Do Not “Explain Yourself” Prematurely
This is where a lot of employees make things worse.
When a commission goes missing, the natural instinct is to send a long email explaining why the commission is owed. People vent. They argue fairness. They write emotionally. They try to reason with managers or HR. That almost always backfires.
Those early explanations get used to frame the dispute in the employer’s favor. They get forwarded. They get dissected. They get quoted later, out of context. Strategy beats venting every time.
You do not need to convince your employer that you deserve to be paid. You need to protect your leverage. Silence, documentation, and timing are often more effective than explanations written in frustration.
Step #3: Get Legal Advice Before Leverage Disappears
Timing matters more than most people realize.
Once you sign a release, accept partial payment, agree to a “resolution,” or wait too long, leverage erodes fast. Employers know this. That is why severance agreements, settlement offers, and quiet “compromises” tend to appear once a dispute surfaces.
Getting legal advice early does not mean you are committing to litigation. It means you are making informed decisions before options disappear. Many commission disputes resolve without a lawsuit, but only after the employer understands the legal exposure. That understanding does not come from internal complaints. It comes from knowing the law and the pressure points.
If you’re trying to figure out how to choose the right attorney for your case, read my guide: How Do I Select a California Employment Lawyer?
How the Ruggles Law Firm Handles High-Value Commission Disputes
At the Ruggles Law Firm, we approach commission disputes with a clear objective: get you paid what you earned.
We focus on high-value disputes where the earning event is clear and the employer overplayed its hand. These are not theoretical arguments or close calls. These are cases where the employee did the work, the deal closed, and the company decided after the fact that it would rather keep the money.
Our approach is practical and strategic. We start by analyzing the commission plan, the earning event, and the paper trail. We look at how the employer framed the dispute and where that framing breaks down under California law. In many cases, the employer’s own documents do most of the work.
Most commission disputes do not end in a trial. They resolve once the employer understands the exposure and realizes that the issue is no longer an internal HR problem, but a wage claim with real consequences. When employers know they cannot talk their way out of it, their posture changes. Our job is to get the case to that point as efficiently as possible.
Frequently Asked Questions About Commission Theft in California
Did I lose my commission just because I was fired after closing the deal?
Not necessarily. If you closed the deal and satisfied the earning conditions in your commission plan, the commission may already be an earned wage under California law. Employers often argue that termination before payment eliminates the obligation, but California courts focus on when the commission was earned, not when it was paid. Many post-sale commission disputes involve employees who closed the deal and then lost the commission after termination.
Is commission theft illegal in California?
Yes. Commission theft in California occurs when an employer refuses to pay an earned commission or takes it back through retroactive plan changes, chargebacks, or reclassification. Once a commission is earned, it becomes a wage, and California law strictly limits an employer’s ability to withhold or forfeit wages. Many unpaid commissions cases fall squarely into this category.
What if my employer says the commission was discretionary or just a bonus?
Labels do not control the analysis. If the compensation tied to objective performance, such as closing a sale or generating revenue, it is likely a commission, not a discretionary bonus. Employers often rebrand earned commissions after the fact to avoid payment, but California law looks at substance, not terminology. Reclassifying earned commission wages does not make commission theft legal.
Can my employer delay paying my commission indefinitely by saying the deal is not final?
No. Employers cannot impose open-ended or illusory conditions to avoid paying earned commissions. While some commission plans tie earning to milestones like customer payment or acceptance, those milestones must be objective and finite. If you closed the deal and nothing remained for you to do, indefinite delay may amount to illegal withholding of commissions under California law.
What should I do if I think my employer is stealing my commission?
Start by preserving evidence, including commission plans, emails, dashboards, and deal records. Avoid sending emotional explanations to your employer that could be used against you later. Commission theft cases are document-driven, and timing matters. Speaking with an experienced California unpaid commissions lawyer early can help you assess whether your employer crossed the line and how much leverage you actually have.
Are commission clawbacks or chargebacks legal in California?
Sometimes, but only in narrow circumstances. Illegal commission chargebacks occur when an employer takes back commissions that were already earned or applies chargebacks retroactively without clear, lawful plan authority. Many commission clawbacks in California violate wage laws once the commission has vested as earned compensation.
How do I know if my situation is a real legal claim or just a contract dispute?
If the issue involves whether an earned commission was paid, California law generally treats it as a wage issue, not a simple contract disagreement. Employers often try to frame commission theft as a “plan interpretation” problem, but once earning occurs, wage protections apply. That distinction is critical and often determines whether the employer faces real legal exposure.
Final Thought: Closing the Deal Should Not Cost You Your Commission
Sales involves risk. That has always been true. What should never be part of the job is wondering whether your employer will honor the deal after you already did.
If you closed the sale and lost the commission, this may be more than a disagreement over plan language. It may be wage theft. California law gives employees tools to fight back, but those tools only work if you recognize what is happening and act before leverage disappears.
Closing the deal should end the story. It should not start the dispute.
If you believe your employer wrongfully withheld or clawed back an earned commission, contact the Ruggles Law Firm to assess your options. We can help you determine whether what happened crossed the line and what you can do about it.
Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Lawsuit
Matt Ruggles has a thorough understanding of California employment laws and decades of practical experience litigating employment law claims in California state and federal courts. Using all of his knowledge and experience, Matt and his team can quickly evaluate your potential claim and give you realistic advice on what you can expect if you sue your former employer.
Contact the Ruggles Law Firm at 916-758-8058 for a free, no-obligation evaluation.
Blog posts are not legal advice and are for information purposes only. Contact the Ruggles Law Firm for consideration of your individual circumstances.
