You closed the deal. The customer signed. The revenue hit the books. Then your employer changed your commission after the sale and acted as if that was perfectly normal. Maybe they said the deal was “too big,” maybe they suddenly discovered “discretion” in the plan, or maybe the explanation changed depending on who you talked to.
I’m Matt Ruggles, and I’ve been practicing employment law in California for more than 30 years. Over that time, I have handled a wide range of unpaid commission disputes across industries, from traditional sales roles to high-level software and enterprise sales. The pattern is remarkably consistent. The commission looks fine when the work is being done. The problem only appears after the sale closes and the money becomes real.
Employers do not accidentally underpay commissions. They do not “misinterpret” plans in ways that benefit employees. Commission reductions almost always flow in one direction, and they happen because employers believe they can get away with it. They assume the employee will be confused, reluctant to push back, or unwilling to challenge a company that controls their paycheck.
I wrote this article because I receive these calls constantly. California law is clear on the central issue: commissions are governed by the written compensation plan, and once a commission is earned under that plan, it becomes a wage. If your employer rewrote the outcome after the sale, their explanation matters far less than what the compensation plan actually says, because employers are not allowed to invent new rules, reinterpret terms, or exercise hindsight discretion once the deal is done. And if the plan itself is unclear, that ambiguity does not save the employer. Under California law, vague or poorly drafted commission terms typically work against the company that wrote them, not the employee who relied on them to earn the commission.
Read on to understand why employers generally cannot change commissions after a sale is complete and when a post-sale “adjustment” crosses the line into illegal wage theft.
If your employer changed your commission after the sale and you are being told to just accept it, that is a red flag. Call me at the Ruggles Law Firm at 916-758-8058. I can review your compensation plan and tell you whether what they did was legal.
Key Takeaways: Can an Employer Change a Commission After the Sale in California?
- If your employer changed your commission after the sale, the first question is whether the commission was already earned under the written compensation plan.
- In California, earned commissions are wages, and once a commission becomes a wage, it cannot be retroactively reduced, clawed back, or rewritten.
- The compensation plan controls when a commission is earned, not management discretion, internal approvals, or post-sale explanations.
- Employers cannot invent new conditions after the deal closes, even if the commission is larger than expected or inconvenient.
- Vague or unclear commission plans usually work against the employer, not the employee, under California wage law.
- Labeling a commission as an “advance” does not avoid liability once the earning conditions are met.
- Post-sale commission reductions often violate California Labor Code § 221 and may constitute illegal wage theft.
- When an employer refuses to explain commission reductions in writing, that is often a red flag.
- Many commission disputes involve significant money and do not resolve internally once the employer decides not to pay.
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?
How Commissions Are Governed Under California Law
California does not treat commissions as a casual perk or a management favor. State wage laws treat commissions as a form of earned compensation, and once the legal requirements are met, those commissions receive the same protections as any other wages. This framework exists precisely because commission disputes tend to arise after the sale, when the employer already has the benefit of the employee’s work and the incentive to reduce what gets paid out.
Commissions Are Not Bonuses Under California Law
Under California law, commissions are wages, not discretionary bonuses. That distinction matters. Bonuses are often tied to subjective judgment or future conditions. Commissions are tied to sales activity and objective criteria laid out in advance. Once a commission is earned under the terms of a compensation plan, wage protections attach immediately.
This is where many employers blur the lines on purpose. They refer to commissions as “incentives,” “targets,” or “management discretion” to suggest flexibility that does not legally exist. California law rejects that framing. If the employee met the defined conditions to earn the commission, the employer does not get to reduce it, delay it, or rethink it after the sale simply because the number is larger than expected or inconvenient.
Why California Requires Written Commission Agreements
California requires commission agreements to be in writing for a reason. Labor Code § 2751 mandates that employers provide employees with a written commission agreement that clearly explains how commissions are calculated and when they are earned. This requirement exists to eliminate oral discretion, informal understandings, and after-the-fact reinterpretations that predictably favor the employer.
The California Department of Industrial Relations has issued guidance emphasizing that commission agreements must clearly describe how commissions are earned and calculated, reinforcing that after-the-fact reinterpretation is exactly what the statute was designed to prevent.
Verbal promises do not override the written plan. Internal emails do not override the written plan. A manager’s post-sale explanation does not override the written plan. Employers are expected to define commission terms upfront, not adjust them once the revenue is secured.
When a commission plan is vague or poorly drafted, that problem typically falls on the employer, not the employee. California wage law does not reward ambiguity, especially when the employer controlled the language and the employee relied on it to perform their job. This is why commission disputes almost always come back to the same document and the same question: what did the written compensation plan say at the time the sale was made?
If you’d like to understand more about what a compensation plan is and how compensation plans work under California law, read my blog: What Is a Compensation Plan in California?
The Compensation Plan Controls When a Commission Is Earned
If there is one section of this article employees need to understand, it is this one. Almost every commission dispute in California turns on a single issue: when the commission was earned under the compensation plan. Not when the employer felt comfortable paying it. Not when accounting closed the books. Not when management signed off. The plan controls, and everything else is noise.
The Compensation Plan Defines When a Commission Is Earned
The written compensation plan sets the conditions for earning a commission. It defines what the employee must do, what events must occur, and when the employer’s obligation to pay is triggered. Courts in California consistently enforce objective, pre-defined criteria, not after-the-fact explanations.
That means employers do not get to invent new requirements once the sale is complete. They cannot retroactively add approval layers, performance standards, profitability thresholds, or deal-size discomfort that were not clearly spelled out in advance. If the plan says the commission is earned when the deal closes, when the contract is signed, or when the customer commits, that is the earning moment. Employers do not get a second bite at the apple simply because they regret the payout.
Compensation plans are scrutinized line by line in commission disputes. The question is never whether the employer thinks the payment is fair. The question is whether the employee satisfied the earning conditions that the employer chose to write into the plan.
Why the “Earned” Moment Is Everything
The moment a commission is earned is the legal line employers cannot cross. Once a commission is earned under the compensation plan, it becomes a wage under California law. That classification matters because wage status triggers powerful Labor Code protections, including restrictions on withholding, reducing, or clawing back pay that has already been earned.
California law broadly defines wages to include all amounts owed for labor performed, not just hourly pay or salary. Under Labor Code § 200, once a commission is earned, it falls squarely within the definition of wages and receives full statutory protection.
Before the commission is earned, employers may have limited discretion if the plan clearly allows it. After the commission is earned, that discretion largely disappears. Employers cannot retroactively adjust earned wages based on business judgment, internal dissatisfaction, or financial surprise. At that point, the commission is no different than hourly pay or salary that has already been earned through work performed.
This is why employers focus so heavily on redefining the earning moment after a dispute arises. And this is why employees must focus on what the plan actually says. Once earning occurs, California law steps in, and employer flexibility ends.
If you’d like to understand more about what earned wages are and when compensation becomes an earned wage under California law, read my blog: What Are Earned Wages in California?
Why Employers Claim They Have Discretion to Change Commissions
When an employer changes a commission after the sale, it is rarely framed as a violation of the compensation plan. Instead, employers almost always claim they had discretion all along. The language varies, but the theme is the same: the employee did the work, the deal closed, and only then did the employer decide the payout was a problem.
Common Employer Excuses After a Deal Closes
Employers tend to rely on a familiar set of justifications once the commission number becomes uncomfortable. Common examples include:
- “Windfall” commissions
The employer claims the commission is unreasonably large compared to expectations, even though the employee followed the plan exactly. The unspoken argument is that the employee earned “too much,” which is not a legal standard under California wage law. - “Unexpected deal size”
Management asserts that the deal was bigger than anticipated and therefore deserves special treatment. This excuse ignores the fact that commission plans are designed to reward sales performance, including unusually successful deals. - “Management approval”
Employers suddenly insist that an additional approval step was required, even though it was not clearly stated in the compensation plan or had never been enforced before. These approval claims often appear only after the sale is complete. - “Business judgment”
The employer frames the reduction as a reasonable business decision, suggesting they are entitled to adjust payouts to protect the company. Business judgment may guide strategy, but it does not override wage laws or rewrite earned compensation.
These explanations are rarely raised before the deal closes. They surface only after the employer has secured the benefit of the employee’s work.
Why These Explanations Usually Fail Under California Law
California law strongly disfavors subjective discretion in commission plans, especially when that discretion is exercised after a commission is earned. Courts look for objective, pre-defined criteria that employees can rely on when deciding how to perform their jobs.
Post-hoc commission adjustments typically violate wage protections because they attempt to retroactively reduce compensation that has already been earned under the plan. Calling a reduction “business judgment” does not change the legal analysis. Business convenience is not a legal justification for withholding or reducing earned wages.
In commission disputes, the focus always returns to the same question: did the compensation plan clearly allow the employer to do what it did before the sale occurred? If the answer is no, the employer’s explanation, no matter how confidently delivered, usually does not survive legal scrutiny.
Most commission disputes are decided by what the compensation plan actually says, not what your employer claims it means. If your company rewrote the rules after the deal closed, call me at the Ruggles Law Firm at 916-758-8058. These cases are often worth far more than employees are led to believe.
What Discretion Employers Are Actually Allowed to Have
This is where the analysis gets more precise, and where credibility matters. California law does not eliminate all employer discretion in commission plans. It limits it. The problem is not discretion itself. The problem is discretion exercised after the fact, without clear rules, and only when the payout becomes painful.
Advance Commissions Versus Earned Commissions
Employers often defend commission reductions by claiming the payment was only an advance. Sometimes that is true. Often it is not. The distinction matters.
- Advances are not wages yet
An advance commission is money paid before the employee has satisfied all earning conditions in the compensation plan. Until those conditions are met, the payment may not yet qualify as a wage. - Chargebacks are only lawful if clearly defined in advance
Employers can require repayment or adjustment of advances only if the compensation plan clearly spells out the conditions under which a chargeback may occur. Vague references to discretion or fairness are not enough. The employee must be able to understand the risk upfront. - Once conditions are met, advances convert to earned wages
When the employee satisfies the earning conditions set forth in the plan, any advance tied to that commission converts into an earned wage. At that point, the employer’s ability to claw back or reduce the commission largely disappears.
Many disputes arise because employers label commissions as “advances” long after the earning conditions have already been met. Labels do not control. The plan does.
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?
If your employer deducts commissions after the fact, you may be dealing with an illegal chargeback. To learn more about this subject, read my blog: What is a Commission Chargeback in California?
Objective Conditions That Can Lawfully Limit Commissions
California law allows employers to impose limits on commissions, but only when those limits are properly structured. Lawful conditions share several common features.
- Customer payment
Employers may condition commissions on the customer actually paying, but only if that requirement is clearly stated in the written plan. - No-return periods
Commission plans may require that a return or cancellation window pass before a commission is earned. Again, this must be defined upfront. - Retention windows
Some plans lawfully require the customer relationship to remain in place for a defined period. These provisions must be specific and tied directly to the sale.
Across all lawful conditions, three rules consistently apply:
- The condition must be written in the compensation plan
- The condition must be objective, not based on subjective judgment
- The condition must relate to the sale itself, not the employer’s later dissatisfaction
When discretion is exercised within these boundaries, it can be lawful. When it is not, it usually becomes a post-sale rewrite of earned compensation. That is where commission disputes turn into unpaid wage claims under California law.
When Changing a Commission After the Sale Becomes Illegal
At a certain point, a commission dispute stops being a disagreement over interpretation and becomes a violation of California wage law. That line is crossed when an employer changes compensation after the commission has already been earned under the compensation plan.
California treats unpaid or reduced commissions as a form of wage theft, which falls under the enforcement authority of the California Labor Commissioner. The Labor Commissioner has the power to investigate, assess penalties, and recover unpaid wages when employers unlawfully withhold earned compensation.
If your employer claws back commissions after a sale closes, those chargebacks may violate California wage laws. To learn more about this subject, read my blog: Proving Commission Chargebacks are Illegal in California.
Post-Sale Commission Reductions Are Usually Wage Theft
Once a commission is earned, California law treats it as a wage. That status matters because wages are protected from retroactive reduction or reclamation.
- Retroactive adjustments violate Labor Code § 221
Labor Code § 221 prohibits employers from taking back or deducting wages that have already been earned. Reducing a commission after the earning conditions are met is treated the same as taking money out of an employee’s paycheck. - Employers cannot reclaim or reduce earned wages
Employers do not get to revise payouts because the deal was larger than expected, margins were thinner than hoped, or management changed its mind. Once the commission is earned, the money belongs to the employee, not the company.
This is why employers focus so heavily on disputing when a commission was earned. If they lose that argument, wage law controls and discretion ends.
Red Flags That Strongly Suggest Illegality
Certain facts show up repeatedly in commission theft cases. If one or more of these apply, the adjustment is often unlawful.
- Vague “discretion” language
The plan references discretion without defining clear limits or objective standards. - No clear earning definition
The compensation plan fails to clearly state when a commission is earned, yet the employer still reduces the payout after the sale. - Adjustments unrelated to employee performance
The reduction is based on profitability, deal size, internal approvals, or business concerns rather than whether the employee met the plan’s requirements. - One-off or selective reductions
Only certain deals or certain employees are affected, often when the commission number is unusually large.
When these red flags appear, the issue is rarely a misunderstanding. It is usually a post-sale attempt to keep money that the law says belongs to the employee.
What to Do If Your Employer Changed Your Commission After the Sale
Step #1: Review the Compensation Plan, Not the Employer’s Explanation
Start with the written compensation plan. Focus on the language that defines when a commission is earned and what conditions must be met. Do not get sidetracked by verbal explanations, emails, or post-sale justifications. What matters is what the plan said at the time you closed the deal, not how management explains the outcome afterward.
Step #2: Demand a Written Commission Reconciliation
After you review the compensation plan, the next move is to get the numbers in writing. This is where many commission disputes either resolve quickly or reveal what is really going on. A proper commission reconciliation should explain how the commission was calculated, what was paid, what was reduced or withheld, and why. You are not accusing anyone of wrongdoing at this stage. You are simply asking the employer to explain their math.
Here is how I would write that request. Keep it respectful, professional, and focused on the documents, not the personalities.
Hello [Name],
I would like to request a written reconciliation of the commission paid on the [deal or customer name] sale.
Please provide a breakdown showing how the commission was calculated under the applicable compensation plan, including the total commission amount, any amounts that were reduced or withheld, and the specific basis for those adjustments. If particular provisions of the compensation plan were relied upon, please identify them.
I want to make sure I clearly understand how the final commission figure was determined and how it aligns with the written commission agreement that was in effect when the sale closed.
Thank you. I appreciate your help.
Best regards,
[Your Name]
A straightforward request like this does two important things. First, it forces the employer to commit to a written explanation. Second, it removes the ability to shift positions later. Employers often avoid responding clearly because once the explanation is on paper, it becomes much harder to defend a post-sale commission change that is not supported by the plan.
If the employer responds with a clear explanation that matches the compensation plan, you may have your answer. If they dodge the request, provide vague reasoning, or refuse to put anything in writing, that is often the moment when a commission issue stops being a misunderstanding and starts looking like an unpaid wage problem.
Step #3: Compare the Reconciliation to the Plan
Once you have the written explanation, compare it directly to the earning language in the compensation plan. Many commission disputes collapse at this stage. Adjustments based on deal size, profitability, internal approvals, or “business judgment” frequently have no support in the plan itself. If the explanation does not match the written terms, the problem is not performance. It is compliance.
Step #4: Consider Contacting an Employment Attorney
By the time an employer decides not to pay a commission, the decision is usually intentional and tied to significant money. These are financial decisions, not misunderstandings, and employers often hold their position once they commit to them. An employment attorney can analyze the compensation plan, identify wage law violations, calculate exposure to unpaid commissions, penalties, and interest, and apply pressure through a formal demand or litigation when necessary. At that point, legal leverage, not internal appeals, is what typically moves the needle.
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?
Frequently Asked Questions About Commission Changes After a Sale in California
Can my employer change my commission after the sale in California?
In most cases, no. If your employer changed your commission after the sale and the commission was already earned under the written compensation plan, California law treats that commission as a wage. Once a commission becomes a wage, it cannot be retroactively reduced, rewritten, or clawed back simply because the employer is unhappy with the payout.
What if my employer says they had discretion to reduce my commission?
Employers often claim discretion, but discretion only matters before a commission is earned and only if it is clearly written into the compensation plan. After a sale closes and the earning conditions are met, employer discretion largely ends. Subjective explanations like “business judgment” or “management approval” usually do not override wage protections.
Can an employer reduce my commission after closing a deal because it was too large?
No. California law does not recognize “windfall” commissions as a legal justification to reduce pay. If the compensation plan allowed you to earn the commission by closing the deal, the size of the commission does not give the employer the right to change it after the fact. A commission being larger than expected does not make it illegal or optional.
What if my commission plan is unclear or vague?
An unclear or poorly drafted commission plan does not usually help the employer. Under California wage law, ambiguities in compensation plans are typically interpreted against the employer that wrote them, especially when the employee relied on the plan to do the work. A vague plan is often a warning sign in commission disputes, not a defense.
When does a commission dispute become a legal claim in California?
A commission dispute often becomes a legal claim when the employer refuses to explain commission reductions in writing or when the explanation does not match the compensation plan. Once an employer decides not to pay an earned commission, the issue usually involves unpaid wages, potential penalties, and interest. At that point, legal leverage, not internal discussions, is often required to resolve the dispute.
Bottom Line: Once a Commission Is Earned, Employers Cannot Change It
Commission theft usually does not happen because employers misunderstand the law. It happens because they count on employees not knowing it. In California, the rule is straightforward: once a commission is earned under the compensation plan, it becomes a wage, and employer discretion ends there. If you closed the deal under the terms your employer set, the commission is usually owed, even if the company later decides it does not like the payout. When employers rewrite the result after the sale, that is not a business decision. It is a wage issue, and California law is firmly on the employee’s side.
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.
