If your paycheck includes commissions, you may have heard your employer refer to certain payments as an “advance.” But what exactly is an advanced commission—and what happens if you don’t stay employed long enough to “earn” the “advanced” commission?
This blog explains what advanced commissions are under California law and what rights employees have when commissions are paid before they are fully earned.
What Is an Advanced Commission in California?
An advanced commission is a partial payment made by your employer before you have fully satisfied the conditions to earn the full commission under your commission plan. These payments are typically made in anticipation that you will later earn the commission by completing a sale, retaining a client, or satisfying other agreed-upon terms.
In other words, it’s not a bonus or a gift—it’s money your employer expects you to earn or potentially repay if you don’t meet the conditions to convert the “advanced commission” into earned wages.
How Advanced Commissions Are Treated Under California Law
California allows employers to advance commissions, but only under clear and lawful terms. Your employer must:
- Have a written commission agreement that explains when commissions are advanced and when they become earned.
- Specify the conditions that must be met for the commission to be “earned.”
- Clearly outline any circumstances under which an unearned advance can be reclaimed or “charged back.”
If you meet the agreed-upon conditions to earn the commission, the advanced commission becomes an earned wage, and your employer cannot lawfully take it back under any “chargeback” provision.
Common Issues Employees Face With Advanced Commissions
Problems often arise when employers fail to clearly define or fairly apply commission terms. Common issues include:
- Repayment demands for commissions after resignation or termination, even when conditions were met.
- Confusing or missing commission agreements, making it unclear whether the payment was a true advance.
- Chargebacks of earned wages due to client cancellations outside the employee’s control.
- Deductions from final paychecks for “unearned” commissions that were never properly documented as advances.
Are Employers Allowed to Claw Back Advanced Commissions in California?
Yes, but only if the commission plan expressly identifies the payment as an “advance,” and if one of the conditions for earning it were not met. Otherwise, the commission is treated as earned wages, and California law prohibits employers from making unauthorized deductions or reclaiming earned wages. If your employer tries to claw back a commission you believe you earned, you may have a claim for unpaid wages.
What You Can Do If You’re Facing an Advanced Commission Dispute
If you believe your employer wrongly withheld or reclaimed a commission, take the following steps:
- Request a copy of your commission agreement
Review the terms to see whether the payment was an advance and what conditions apply. - Request a Reconciliation of Your Commission Payment from the Employer
Ask your employer for a report showing when commissions were paid, and when deductions were made for any charge-back of any advanced commission. Ask for a report for the past three (3) years, or since you were hired is less than 3 years.
- Document your work and communications
Save sales records, emails, and client correspondence showing your performance. - Check your final paycheck
California has strict laws about what employers can deduct from final pay. - Contact an employment lawyer
You may have a legal claim for unpaid wages if the commission was earned but unpaid or improperly clawed back.
Conclusion
Advanced commissions are legal in California, but they must be clearly defined and fairly administered. If you completed the required work and met all the commission terms, the commission may no longer be considered an “advance”—it becomes an earned wage protected by law. If your employer is demanding repayment or withholding commissions you believe you earned, it’s worth getting legal advice to understand 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.
