Commissions Archives

Recoupable – Key Words & Phrases

Published on April 19th, 2013 by Alan L Sklover

Key Words

What is the meaning of:


Basically, it means “capable of being taken back.”

In the employment context, “recoupable” is most often used in commission plans, bonus plans, or other compensation plans that pay employees according to their success in bringing in business or revenue. The word “recoupable” means that the Employer is permitted, even after payment
of the compensation to the employee, to demand the payment be repaid, or to withhold other monies due the employee if repayment is not made.

Here’s an example: suppose a salesperson earns a 10% commission on sales. Often the employer will provide the salesperson some money “up front” to give him or her a head start on earnings. This is commonly called an “advance against commissions,” or a “bonus advance.” If it should turn out that, after a period of time the employee does not earn all of the “advance” payments, if the “advance” is a “recoupable” advance, then the employee would have to repay the employer the amount not earned.

So, if the advance is $1,000, and the amount actually earned after the designated period of time is only $800, then the extra $200 is recoupable.

Incidentally, the opposite of “recoupable” is “non-recoupable,” which means just the opposite: any “advance” not earned is kept by the employee, and not required to be paid back to the employer.

If you are the recipient of commissions, bonuses, or other compensation, especially compensation based on financial performance, and if you are
entitled to upfront payments, usually called “advances,” make sure you ask “Are these recoupable, or non-Recoupable.” The answer is important to your financial planning and future.

© 2013 Alan L. Sklover. All Rights Reserved. Commercial Use Strictly Prohibited

“Can I be forced to repay commissions I never received?”

Published on October 25th, 2011 by Alan L Sklover

Question: Can my employer take commissions away from me that were paid to another sales representative prior to me even working for the company?

This is the situation: my employer is clearing up old debts, and writing them off before the end of the year. Each territory will be responsible for the commissions already paid even if you were not the person who was paid the commission. This seems very unfair to me since I never got the money in the first place.

Thanks for your help.

(City and State Not Listed)

Answer: Dear Melissa: While on the surface, the answer to your question seems quite simple, it may not be as simple as it seems.     

1. While what is happening to you sure feels unfair, feelings don’t matter: what was agreed previously by you and your employer, if anything was agreed, is what matters. So very often I am presented with situations – like yours – that makes my blood boil, but the “feelings” don’t matter so much as what was agreed to by you and your company. That is the first place to start. Courts say, in effect, “Hey, it’s not for us to decide what is fair, if the employee and the employer previously agreed on what they thought was fair.” So, was anything agreed?

2. The next step is this: is there any written document that shows what you and your employer decided was fair? Employees and employers sometimes decide what is fair in a written document, and that is the kind of evidence we all – including courts – would like to see first. Such written documents may be: (a) an employment agreement; (b) a “welcome aboard” or “offer” letter; (c) a commission plan or agreement that you indicated, by signature or email, was acceptable to you; (d) a company policy book that you agreed to abide by; (e) an Employee Handbook that you confirmed receiving; or (f) something else in writing, even an email. Consider asking Human Resources in an email something like “Did I ever agree to repay monies I never received? If so, was it in writing? If so, can I have a copy?” That’s one place to start.   

3. Read your company’s Commission Plan especially carefully. It is possible that the wording of your company’s Commission Plan, which you agreed governed your commission payments, did say that “a territory is responsible for repayment at a later date.” If so, then it is a bit “gray,” as it said “a territory” and not “you” or “the sales representative for that territory.” And, to my mind, if this is what the Commission Plan says, that “grayness” is still in your favor, because in law, there is a legal principle that says, in effect, “If something is not clear, then it is interpreted against the interests of the drafter, as almost a penalty for being sloppy.” And, too, if it is not “crystal clear” that you understood this provision, then odds are you would not be legally bound to it.   

You might want to quickly read an article I wrote entitled “Commission and Sales Bonus Plans – Read Them or It Will Cost You” by clicking on that title. 

4. If neither you nor HR can find any agreement in writing, consider whether it was agreed to in spoken words; even spoken agreements can be enforceable. Though it is hard to establish if something was agreed to in a spoken conversation, and even harder to determine the precise details of a spoken conversation, sometimes it is possible to do so by, for example, witness, tape recordings or subsequent confirmation in writing.

5. If you did not previously agree to repayment of monies you never received, either in writing or in conversation, then your employer cannot take from you monies you never agreed to pay or repay. The law is quite clear that you must be paid what you have earned. Not less, and surely not less because someone else was paid it. I suggest that, if this is the case, you have a respectful conversation about what happened, and using this information, respectfully request you be paid all you have earned, and not less.

We also offer a Model Letter entitled “Memo Requesting Monies Not Yet Paid by Present Employer.” To obtain a copy [click here].

A thought: You did not mention in your email in what state you live. In most states, the law would provide you with six (6) years to sue on a debt due you; you might consider waiting until either you leave, or it’s “the right time” to make such a request, if you truly fear negative repercussions.

Melissa, it’s hard enough to earn money these days; you should never have to repay money that you never received in the first place . . . unless, of course, you agreed to do so.  

Sorry for your difficulty. I truly hope this helps. Thanks for writing in; please help us by telling others of our blogsite.   

Al Sklover

If you agreed to repay your former employer (a) tuition reimbursement, (b) relocation expenses, (c) a sign-on bonus, or even (d) a short-term loan, you may be able to have that obligation waived and forgiven. To obtain a copy of our Model Memo entitled “Model Letter for Repayment Obligation Forgiveness – with 18 Great Reasons,” just [click here.] “What to Say, and How to Say It.™” – Delivered by Email – Instantly!

© 2011 Alan L. Sklover, All Rights Reserved.

“Commission and Sales Bonus Plans: Read them or it will cost you.”

Published on June 8th, 2011 by Alan L Sklover

Question: My job was in a sales group. A significant part of the compensation was a quarterly Sales Bonus based on revenue from customers. My offer letter stated “You will be paid at 100% of your target for the first two quarters of eligibility.”

I was terminated a few weeks before the end of the second quarter. HR now tells me that the Sales Bonus plan requires a person to be on the payroll on the last day of the quarter to receive any Sales Bonus for that quarter. This requirement was not mentioned in my offer letter or the Employee Handbook. My offer letter does not contain any language that it is “subject to the terms of a Sales Bonus plan” or anything like that.

Am I entitled to a prorated portion of the Sales Bonus for the second quarter? Thank you. 

San Jose, California

Answer: Dear William:    

Your situation, and the question that has arisen from it, is a very good illustration of an important lesson that applies to all employment: There is no substitute for reaching out to find out all details of employment and compensation.

1. Employers have no obligation to tell employees all details of their employment relation or compensation. Do friends have to tell each other all “details” of their friendship relation? Do married people have to tell each other all “details” of their marital relation? They do not, and employers don’t either, although some states are requiring so-called “wage disclosure” laws that require certain aspects of wage information.

2. To the contrary, it is incumbent upon each employee to “protect” him – or herself by trying to nail down those details. If an employee wants to know all the details of the employment relation, including compensation, he or she should insist on finding out what they are and, if necessary, confirming them in writing, before starting the job. Does this sound reasonable? At times, yes, and at times, no. But to the extent an employee does not ask “all the questions” that employee is vulnerable to grave disappointment. In my office there is a small tapestry that reads “The large print giveth, and the small print taketh away.”

One way you can do that is by confirming – in writing – your understanding of the basic terms of your employment before taking a job.

To obtain a Model Letter that helps you do just that, simply [click here].

3. From what you wrote, your employer promised to pay you Sales Bonus “if” you become eligible, but your employer apparently did not say “when” or “how” you would become eligible. My reading of what you wrote says you are to receive Sales Bonus “for the first two quarters of eligibility.” However, nothing you wrote says “when” and “how” you were to become eligible. Either that is written in some other Sales Bonus plan document, or perhaps it is not written anywhere, but is only an informal “practice” of your employer. There’s no legal requirement that policies or practices must be in writing. But, from what you have written, that is the key to your concern: “when” and “how” an employee becomes “eligible.”

4. I suggest you ask for (a) a written explanation, or (b) a pro-rata payment: It can’t hurt to ask. I suggest you put into a letter – written with considerable respect – to the Head of HR asking “Where is it written that an employee needs to be on payroll on the last day of the quarter to receive Sales Bonus.” First, they may respond and in that response provide you with an answer that satisfies you – either an explanation or a check. Second, they may respond with an answer that does not satisfy you, but you can bring it to a Small Claims Court as proof of why you believe you deserve pro-rata payment. Third, they may not respond at all, which is something you can tell a Small Claims Court, which may sway a Small Claims Judge to award you what you seek.

If you’d like to obtain a forceful Model Letter that Demands Payment of Compensation due you from a previous employer, simply [click here].

5. You may also go directly to a Small Claims Court, or State Labor Board. Finally, unless you believe it might hurt your chances for either re-employment by that employer or by another employer, you might proceed directly to file a claim with a Small Claims Court or State Labor Board. The California Department of Industrial Relations provides a useful guide to filing a claim with them at

Thanks, William, for writing in. We all learn lessons each day, and I hope if you again seek a job that pays commissions, sales bonus or any other kind of compensation conditioned on your efforts, you will request and read every word and punctuation mark about how the system works. That is becoming more and more important every day.

Al Sklover

© 2011 Alan L. Sklover, All Rights Reserved.

“Can an employer change the time commissions are earned and paid?”

Published on January 6th, 2011 by Alan L Sklover

Question: My wife was called into her boss’s office yesterday (he is the company’s owner) and asked to change her compensation starting January 1st from (1) salary plus 7% commission to (2) straight 30% commission. This new compensation plan would have given her an extra $10,000 compensation this past year, so it seems like a good deal.

The question is how to handle “carry over sales,” that is, the sales that were booked (i) while the old commission plan was in place, but (ii) have not yet been paid for by the customer.

Before last spring, commissions were earned and paid when a sale was booked. After last spring, the company changed policies so that commissions were considered earned and were paid when the customer made its payment. Right now, there are $86,000 of sales that have been (i) booked, but (ii) not paid for by customers. 

The owner wants to pay my wife 7% of these $86,000 “carry over” sales, while my wife thinks she should get 30% on them. When she voiced her opinion, her boss stated that either she takes the 7%, or she will be fired.

Is this wage theft? Extortion? Does she have any recourse if she is fired? 

         Cedar Rapids, Iowa

Answer: Dear Derek, Your questions are especially helpful, as they are quite common among commission-based salespersons.

First, rights to commissions are determined by what the employer and employee agree to. Whenever people are paid for their services on a commissions basis, decisions regarding (i) when they have earned those commissions, (ii) the amount they are due, (iii) the timing of when they are to be paid, (iv) what conditions (if any) apply, and (v) all other terms and conditions of payment, are generally determined by the agreement reached between employee and employer.

From what you have written, as of last spring, the company changed its commission policy, and your wife indicated her agreement with that change by staying with her employer. Thus, as of last spring, she became due (a) 7% (b) of client monies (c) when paid by the customer (in addition to her salary.) If your wife did not agree to this change, then she could have left the company and sought employment elsewhere.    

Second, the employee and employer can change their agreements whenever they want to. That seems to be exactly what happened here: during the spring, the employer changed its policies and, in effect, said to your wife, “If you would like to remain with us, you will need to agree with this change in when you have earned, and get paid, commissions.” Your wife could have left, but decided to stay. In that way, she would be viewed to have consented to the change.

Third, changes in agreements are presumably “prospective,” not “retroactive.” Employers are free to change their compensation policies, and employees are free to accept or reject those changes. But unless the parties agree otherwise, changes take place only after they are agreed upon, not retroactively.

From what you have written, the new change to (i) commissions-only compensation and (ii) to commissions of 30% of collections takes place January 1st. Taking into account the agreement between your wife and her employer – effective last spring – that commissions are earned and paid only when a customer has paid, it would seem to me that the commissions on the $86,000 “carried over” sales would be earned and paid in the future – after January 1st – and would be paid at the commission rate then in effect: 30%. So, if it is logic that you seek, “Judge Sklover” (ha ha ha) would find in your wife’s favor, and against her employer’s position.

But Wait: Logic doesn t make the biggest difference, agreement does. It seems to me that your wife and her boss apparently have not yet really agreed on all of the terms of their new employment relation. While your wife has logic on her side, logic is not what counts, agreements count. Your wife’s boss is saying, in effect, “If you want to stay working here, this is my decision on the $86,000 in carry over sales. Take it or leave.” Your wife is free to do either, and to remain or leave (assuming, of course, that she does not have a contract for a definite period of time.)

Finally, while “take it or leave” sounds extortionate, it is not extortion. Nor is it “wage theft.” As I noted above, your wife agreed last spring that, if customers did not pay their bills by December 31st, then she was not due commissions on those sales on December 31st. In relations, including employment relations, “Take it or leave” is not extortion. Extortion is a threat to do something or reveal something about someone unless they pay you a lot of money. To end a relation is not such a threat. 

It’s important to bear in mind that employees and employers can both make a “threat” to end their working relation if they don’t get something they want. It’s sort of “equal” in that regard. Sure, there seem to be more employees seeking jobs than there are employers seeking employees. But that is not always the case. And, too, great employees are always in great demand.

Sorry if this is not exactly the answer you had hoped for, but it is the truth, and I’m certain you were most interested in that.

Thanks for writing in. If this has been helpful, please tell two or three friends about our blogsite, so that they too can learn how to navigate and negotiate for themselves at work.

          Best, Al Sklover   

© 2011 Alan L. Sklover, All Rights Reserved.

“Can my employer change our commission plan any time it wants to?”

Published on December 18th, 2010 by Alan L Sklover

Question: I enjoy reading your blog and find it very helpful. I work for a company as an Inside Sales/Application engineer. Compensation is a salary plus commissions.

Commissions are earned upon meeting a specified amount of dollar booking for the quarter. Commissions are then paid out in month 4 upon receipt of receivables.

Recently the CEO announced that the company would not pay out commissions due if the prior month’s booking did not meet a specified target she would set. This was never part of the original compensation plan. Nor is there anything in writing from the company stating this change.

Can they do this? What can I do to ensure I’m paid what is due?

         New Brunswick, New Jersey

Answer: Dear Frank, I’m glad you enjoy reading our blog. It’s what makes writing it so much fun. Here’s my responses to your questions:

a. Generally, employers and employees can say to the other, “I’d like to change the rules”: Unless you and the company have an agreement (written or oral) that says, in effect, “The company cannot change its commission plan unless it gives a certain amount of prior notice, say, six months, then the company cannot always change its commission plan whenever it wants to. Bear in mind, Frank, that you can also say to your employer, “Starting next month, unless I get a 2% increase in my commission rate, I am taking a different job.” It’s a two-way street. And by “rules” I mean any term of the employment relation, from your title to your hours, from your compensation to your territory.

b. However, neither employer nor employees can “change the rules” retroactively: A change in the commission plan can be prospective, only, not retroactive. Said differently, an employer can change the way commissions are earned and paid in the future, not in the past. So, if you earned a certain commission in prior quarters, you must be paid those commissions according to the former commission plan. But going forward, any commissions earned must be earned in accordance with the new commission plan.

If you would like to obtain a Model Letter for Requesting Commissions Earned But Not Paid due to Retroactive Commissions Plan Change, that you can adapt to your own facts and circumstances, that shows you “What to Say, and How to Say It™” just [click here.] Delivered by Email – Instantly!

c. Some prior notice of “Rule Change” is necessary, but it does not have to be in writing: There does not need to be anything in writing to change a commission plan. The essential thing is that the employees got notice of it in some way. Apparently you heard about the change in commission plan from  the CEO, or an announcement by her, or from others. So long as you learned of it, you have a choice to either (i) accept it, (ii) seek to change it through some sort of negotiation, or (iii) find a job with a different employer where the commission plan is more to your liking.

d. There are two basic ways to ensure you get paid all you deserve: First, you should keep careful track of each sale, each commission paid, and each payment received, in order to do your own calculations of commissions earned and due. The second way is more fundamental: make sure you are the most successful salesperson in the company, close to clients, and able to “walk” if you don’t get what you want. With that status, most companies would do all they can do – and sometimes even more than that (ha ha) – to get you to stay. I have many times been able to negotiate higher compensation for my clients than was “permitted,” “allowed,” or “ever been paid,” where the client had the relations, the skills, and the history of success, because they had demonstrated their unique and special value. The opportunity to do that is available to everyone.

Commissions, wages or other monies owed to you by former employer? Your best bet is to make a written request. We offer a Model Letter to show you “What to Say, and How to Say It.”™ To obtain your copy, just [click here.] Delivered by Email – Instantly!

Hope this is the information you needed. My best to you.

Best, Al Sklover

P.S.: One of our most popular “Ultimate Packages” of forms, letters and checklists is entitled “Ultimate Resignation Package” consisting of two Model Resignation Letters, a Model Involuntary Resignation Letter, a Memo to HR Pre-Exit Interview, and our 100-Point Pre-Resignation Checklist. To obtain a complete set, just [click here.] 

© 2010 Alan L. Sklover, All Rights Reserved.

Alan L. Sklover

Alan L. Sklover

Employment Attorney
and Career Strategist
for over 35 years

Job Security and Career Success now depend on knowing how to navigate and negotiate to gain the most for your skills, time and efforts. Learn the trade secrets and 'uncommon common sense' of Attorney Alan L. Sklover, the leading authority on "Negotiating for Yourself at Work™".

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