Draw Vs Commission Legality

Summary

In California, draws against commission are considered advances on future earnings. Employers cannot reclaim these advances if sales targets arent met, unless the draw is explicitly stated as a loan in the agreement. Its crucial to clearly outline terms in the draw agreement to ensure compliance with state labor laws. Regularly reviewing and adjusting policies is recommended.

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It is an advance
In California, if the draw is considered an advance on future commissions:
- Employers typically cannot reclaim the draw if the employee does not earn sufficient commissions to cover the advance.
- This holds unless the agreement clearly states the draw as a loan.
You might want to review your draw agreement terms to ensure compliance. Would you like more detailed information on this?
My concern is
Sure, I can help with that! Could you please clarify what specific concern you have about the draw versus commission arrangement?
my concern is that they get an hourly wage just in case they don’t earn enough in commission throughout the month then I feel like I’m giving them the draw as extra money
Case Rating: *
Your concern about providing both an hourly wage and a draw versus commission is understandable. In California, employers must ensure that any draw policies comply with state labor laws. Here are some key points to consider:
- Clearly outline the draw as an advance, not a loan.
- Ensure your draw agreement specifies all terms and conditions.
- Regularly review and adjust policies to comply with state laws.
Would you like more detailed assistance or guidance on drafting your draw agreement?