The full text of the statute reads as follows:
LC 204.1. Commission wages paid to any person employed by an employer licensed as a vehicle dealer by the Department of Motor Vehicles are due and payable once during each calendar month on a day designated in advance by the employer as the regular payday. Commission wages are compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.
The provisions of this section shall not apply if there exists a collective bargaining agreement between the employer and his employees which provides for the date on which wages shall be paid.
California Labor Code 204.1 LC requires licensed car dealers to pay their salespeople commission wages once a month. This payday must be designated in advance. And the commission wages must be a proportional percentage of their sales for that month.
LC 204.1 does not apply if the salespeople at the car dealer are part of a collective bargaining agreement as long as the agreement provides what the paydays are.1 (Most non-vehicle salespeople must receive their commission paychecks twice a month, not once.2)
Commission wages are not due until they are “earned.” According to the California Division of Labor Standards Enforcement (DLSE), commissions are not “earned” until they can reasonably be calculated.3
- California Labor Code 204.1 LC – Commissions paid to employee of vehicle dealer; Time for payment; Effect of collective bargaining agreement. See also: Areso v. CarMax, Inc. (Cal. App. 2d Dist., 2011), 195 Cal. App. 4th 996, 124 Cal. Rptr. 3d 785; Keyes Motors, Inc. v. Division of Labor Standards Enforcement (Cal. App. 2d Dist., 1987), 197 Cal. App. 3d 557, 242 Cal. Rptr. 873.
- Labor Code 204.
- DLSE Opinion Letter 2002.12.09-2 (December 9, 2002).