Can an employer charge back more than the commission a sales agent earned on a sale?

UPDATED: Nov 16, 2018

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Can an employer charge back more than the commission a sales agent earned on a sale?

My employer pays me upfront for sales that I make, typically a percentage around

4% of the annualized amount of the sale. So if I make a sale with a $1000 monthly

premium, I would make 4% of $12,000. However, if the client cancels the sale, which is completely out of my control, my employer charges me back 15% of the

annualized amount of the sale, so in this case 15% of $12,000. Is this legal? Is it unconscionable? What are my options if chargebacks are basically wiping out all my earnings because I’m paying much more for each chargeback than those sales ever made me on commissions?

Asked on November 16, 2018 under Employment Labor Law, Florida


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Unconscionable and illegal are two very different things. Is it unconscionable? Yes. Unfair? Yes. Unethical? Yes. 
But illegal? No. The problem is, any commission agreement agreed to between the employer and the employee is legal--including this. If you have been or continue working there knowing that this is arrangement, you are considered to have agreed to it: working someplace (i.e. not quitting when you know the terms and conditions of employment) means that agree to them, since if you did not agree, you'd quit and find other work. So this is legal, and your only recourse is to seek other, better employment.

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