PROFESSIONAL LEGAL SERVICES SINCE 1927

Under Iowa law, an employee who was recently fired or quit is entitled to all earned wages. For employers who pay their employees based solely on salary or hourly rate, this is fairly straightforward. What qualifies as an earned wage becomes more unclear if you pay your employees commission.

Whether you are required to pay a former employee commission is highly dependent on the terms of their employment contract and what steps must be completed to earn commission in their position. Many contracts will contain explicit language explaining when commission is earned and payable. These terms may indicate what actions must be completed and set out payment plan that pays out earned commission in future months. A clear and detailed employment contract helps to prepare to defend yourself if former employees demand unearned commission in the future.

If the employment contract does not specifically state when commissions are deemed earned and payable, the amount due will depend on the specific circumstances of the job. For example, some commission is tied to the signing of a contract whereas other commission may be tied to the product being delivered. If the commission earned is disputed, a court would consider what work-related tasks normally need to occur in order to earn commission in order to determine if enough work was complete to deem it “earned” under Iowa law.

The attorneys at Simpson, Jensen, Abels, Fisher & Bouslog, P.C. are experienced in handling complex employment issues. If you have questions regarding whether you are required to pay a former employees commission, Contact us at (515) 288-5000to discuss with our firm.


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