If your employer hasn’t paid you everything you’re owed, you may be wondering what exactly counts as a “wage” and when that wage becomes “earned.” Under California law, wages include not just hourly pay and salaries—but also commissions, bonuses, and other forms of compensation. Once wages are earned, your employer is legally obligated to pay them in full and on time.
This blog explains what “earned wages” means under California law and how commissions fit into that definition, so you can better understand your rights if you’re facing a potential wage issue.
What Are Earned Wages?
California Labor Code defines wages as all amounts for labor performed by employees, whether calculated by time, task, piece, commission, or other method. Once the work is completed—or the agreed-upon conditions are met—those wages are considered earned.
Earned wages can include:
- Hourly wages or salary
- Overtime pay
- Non-discretionary bonuses
- Earned commissions
- Payments for unused vacation
- Reimbursement for required expenses
Once earned, wages must be paid within deadlines set by California law, including strict final pay requirements upon termination.
Are Commissions Earned Wages?
Yes. Commissions are wages under California law. This means that once a commission is earned, it must be paid in full, just like hourly pay or salary.
Whether and when a commission is earned depends on your written commission or compensation plan. These plans usually define the conditions that must be met for a commission to be earned—such as closing a sale, delivery of a product, or receipt of customer payment.
Once those conditions are satisfied, the commission becomes earned wages, and your employer cannot lawfully withhold or reclaim it unless the plan allows it and California law permits it.
Common Issues Employees Face With Earned Wages
Many California employees face problems with earned wages, especially when commissions are involved. Common issues include:
- Unpaid commissions despite meeting the conditions in the compensation plan
- Delayed payment of wages or commissions after resignation or termination
- Disputes about whether a commission was truly “earned”
- Claw backs or chargebacks of already-earned commissions
- Improper deductions or offsets taken from final pay
- Misclassification of non-discretionary bonuses as discretionary to avoid payment
Why Employers Often Get It Wrong Paying Earned Wages
Employers sometimes misapply the terms of a compensation plan or attempt to retroactively change it. Common employer mistakes include:
- Using vague or unwritten commission terms
- Claiming commissions aren’t earned unless the client pays—even when the plan says otherwise
- Withholding earned commissions until a later date not authorized by law
- Deducting money from earned wages without legal justification
Once a commission is earned under the terms of the plan, it becomes a wage—and employers have limited ability to interfere with its payment.
What You Can Do If You Haven’t Been Paid Earned Wages
If you suspect your employer failed to pay you earned wages, including commissions, here are a few steps to consider:
- Review your compensation plan
Understand how your commissions are structured and when they are considered earned. - Document everything
Save emails, pay records, commission reports, and written agreements. - Make a written demand
A formal written request for unpaid wages or commissions may be necessary. - Consult with an employment attorney
Wage claims can often be resolved through the Labor Commissioner or a legal demand letter. In some cases, a lawsuit may be appropriate.
Conclusion
Wages in California include more than just your base pay. Commissions are wages, and once earned under your compensation plan, your employer must pay them in full and on time.
If you’re dealing with unpaid commissions, withheld bonuses, or delayed final pay, you may have a claim for unpaid earned wages. Understanding how and when your compensation is earned is the first step toward protecting your rights.
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 consultation.
Blog posts are not legal advice and are for information purposes only. Contact the Ruggles Law Firm for consideration of your individual circumstances.
