In California, your commission agreement controls when, or even whether, an employer is required to provide earned commission pay after your termination.
Many California employers use forfeiture provisions that require you to be currently employed to receive your commission. Therefore, if you are terminated before you receive your commission, you forfeit it.
If your commission agreement has no forfeiture provision, then you are generally entitled to receive unpaid commissions even after leaving your job.
California courts have disagreed over whether forfeiture provisions are enforceable.
In this article, I discuss what you need to know about commission pay following termination in California.
“Commission Agreement” Meaning
A commission agreement – sometimes known as a commission plan – details how your commission payments will be calculated and paid.1
The agreement is often a part of your employment contract and must be in writing whenever any part of your pay includes commission wages.2 It cannot violate any labor code sections in California employment law, like those concerning
Commission agreements provide that a commission is not earned until it can be “reasonably calculated.”4 Only once it can be “reasonably calculated” is it earned. Once it is earned, the employer must pay it on your next payday.5
“Forfeiture Provision” Meaning
A forfeiture provision in California is a standard clause included in your written commission plan. It states that you have to be currently employed to receive your commission payments.
When there is a valid forfeiture provision, you are not entitled to receive unpaid sales commissions following your termination. Under the written agreement, you have forfeited your right to your unpaid commissions upon termination of employment.
When There Is No Forfeiture Provision
If there is no forfeiture provision in the commission agreement – or if there is one but it is not enforceable in court – then you are entitled to receive the commission wages you earned.
If you are terminated or quit with at least 72 hours’ notice, your unpaid wages, including commissions, are due on your last day. If you quit with less than 72 hours’ notice, the employer has 72 hours to pay you.6
In some cases, however, it may take additional days, weeks, or longer to “reasonably calculate” what your earned commissions are. This typically happens when either:
- Certain conditions set out in the commission agreement have not yet been met,
- The payment for the goods or services you sold is still pending, and/or
- Commission pay turns on your performance for a designated time period, such as a month or a quarter or even a year.
In these types of situations, the employer must pay you as soon as your earned commissions can be reasonably calculated.7
Learn more about final paychecks in California law.
Enforceability of Forfeiture Provisions
California courts have split over whether forfeiture provisions are enforceable.
The Courts of Appeals in both the First District8 and the Second District9 have decided that forfeiture provisions in commission agreements are legally binding and enforceable.
However, the Court of Appeals for the Fourth District of California has ruled that forfeiture provisions are unconscionable and cannot be enforced in the district.10 The Fourth District covers the following counties:
- Imperial,
- Inyo,
- Orange,
- Riverside,
- San Bernardino, and
- San Diego.
The Supreme Court of California has not yet resolved this disagreement between the state’s appellate courts.11
When Payments Are Late
If the California employer willfully fails to pay you your earned commissions following termination – and there is no good faith dispute – the employer should pay you waiting time penalties equal to your regular rate of pay for each day late, up to 30 days.
To recover your earnings, you can file a wage theft claim with the California Labor Commissioner.
Note that some employers try to avoid paying overtime to commissioned workers by misclassifying them as outside salespeople rather than inside salespeople. Inside salespeople spend at least half their time at the employer’s place of business.
If you are actually an indoor salesperson and have worked more than:
- 8 hours in a workday,
- 40 hours in a workweek, or
- 6 consecutive days in a workweek,
You can also pursue overtime pay from the employer, which is typically 1.5 times your regular rate of pay. It can be doubled if you worked more than:
- 12 hours in a workday, or
- more than 8 hours on the seventh consecutive day in a workweek.
Frequently Asked Questions
Do I still get my commissions if I am fired or quit?
Yes. In California, earned commissions are legally considered wages. Whether you are terminated or resign, your employer is lawfully obligated to pay you for any commissions you have already earned.
What if my commission cannot be calculated on my last day?
If a commission is based on an event that hasn’t happened yet (like a customer paying an invoice) or a calculation that can not be done yet (like end-of-quarter profits), the employer is not required to pay it on your final day in California. However, they must pay it to you immediately once the amount can be reasonably calculated.
My contract says I forfeit my commissions if I leave the company. Is that legal?
It depends, but often no. California courts generally dislike “forfeiture provisions” and frequently rule them unenforceable, especially if you have already completed all the work necessary to earn the commission. However, if your contract requires you to perform ongoing duties to finalize the sale, the provision might be upheld.
What should I do if my former employer refuses to pay my commissions?
If you believe you are owed unpaid commissions, you can file a wage claim directly with the California Labor Commissioner’s Office (DLSE) or consult with a California employment attorney to help you recover your unpaid wages and potential “waiting time” penalties.
Additional Reading
For more in-depth information, refer to these scholarly articles:
- Substantive Pay Equality: Tips, Commissions, and How to Remedy the Pay Disparities They Inflict – Yale Law & Policy Review.
- Retail Workers’ Job Experiences: An Analysis of Emotional Labor, Commission Pay, and Stress – Texas State University.
- The symbolic meaning of pay contingencies – Human Resource Management Review.
- Performance pay and worker cooperation: Evidence from an artefactual field experiment – Journal of Economic Behavior & Organization.
- Creating unfairness by mandating fair procedures: the hidden hazards of a pay-for-performance plan – Human Resource Management Review.
Legal References
- California Labor Code 2751.
- Same.
- 8 California Code of Regulations 11040(4)(B).
- DLSE Opinion Letter 2002.12.09-2 (December 9, 2002).
- See California Labor Code 204(a) and Sciborski v. Pacific Bell Directory (2012) 205 Cal.App.4th 1152.
- California Labor Code 201(a).
- California Labor Code 203. Senate Bill 261 (2025).
- American Software, Inc., v. Ali (1996) 46 Cal.App.4th 1386.
- Nein v. HostPro, Inc. (2009) 174 Cal.App.4th 833.
- Ellis v. McKinnon Broadcasting Co. (1993) 18 Cal.App.4th 1796. Forfeiture provisions in employment agreements are more likely to be unconscionable if: the employee did not notice the provision when they signed the contract; there was no indication that the employee could negotiate; the employee was not represented by a lawyer; the agreement was not presented until after the employee had moved to the area to take the job; and the employer had no justification for withholding the earned commission payments. See also Wherry v. Award, Inc. (2011) 192 Cal.App.4th 1242.
- Assembly Bill 692 (2025).
