New York Sales Commissions Law

Why I wrote this guide

Unpaid commissions are one of the most common wage problems I see, and one of the least understood. A salesperson works a year, leaves for a better job, and the deals that were signed and delivered on their watch go unpaid. When they ask, they are told the plan forfeits commissions on termination, or that the company reserved the right to change the plan, or that they were an independent contractor and none of this applies. Most people take that answer at face value. Often it is wrong.

Employers make the same mistake, and often sincerely. The usual position on the other side is that a commission dispute is a matter of contract and nothing more: the plan is the deal, the plan says what it says, and that ends it. It does not. For an employee, an earned commission is a wage, and Article 6 of the Labor Law imposes requirements the plan cannot override — a signed written plan, strict limits on deductions, and no forfeiture of a commission already earned. I see that position taken in response to a demand letter and held until it fails, which is an expensive way to be wrong. The employer ends up owing the commission, an equal amount again in liquidated damages, prejudgment interest, and the employee’s attorney’s fees on top of its own. There is a good-faith exception to the liquidated damages, but sincerity does not satisfy it: the employer has to show that its belief was objectively reasonable and that it took active steps to find out what the law required before it acted. Assuming the plan is the whole story is not one of those steps.

Part of the reason is that the law is scattered. Article 6 is only one of three schemes. Wholesale sales representatives have a statute of their own. Freelancers have a third, now in force both in New York City and statewide. And the questions that decide most disputes — when a commission is earned, whether a plan term is enforceable, what happens to a deal that closes after you leave — were answered by courts, in decisions that sit behind a subscription paywall. A salesperson trying to check their own rights hits that paywall at the first citation.

So this guide publishes the authority itself. Every decision it cites is here in full text, with the complete citation and a free PDF carrying official reporter page numbers, so you can read the rule for yourself and quote it the way a court expects to see it quoted. The statutes are here too, each linked to the part of the guide it governs.

I represent salespeople, not the companies that employ them. New York’s wage laws shift attorney’s fees to an employee who wins, which is what makes it practical to pursue a commission a company has simply decided not to pay. But you should be able to understand your own position before you call any lawyer, including me.

Five things every New York salesperson should know

1. An earned commission is a wage. For an employee, it has the same protection as a paycheck (Labor Law § 190(1)). For a contractor, it is a debt the company owes. Either way, the company cannot simply keep it.
2. What you did, and when, usually decides the case. A commission is generally earned when your sales work is done, with or without a written plan. A deal you completed before leaving is yours even if the customer pays later (Pachter; Arbeeny).
3. A plan cannot forfeit a commission you already earned. Parties are "not free to enter into contracts which violate public policy," so earned wages cannot be contracted away (Weiner).
4. The law requires a writing. Employers must give commissioned employees a signed written plan (§ 191(1)(c)). Wholesale reps are entitled to a written contract (§ 191-b). Most other freelancers earning $800 or more are too.
5. Some deadlines are short. 180 days to put company owners on notice. Two years for retaliation, and for a freelancer's missing-contract claim. Six years for most New York wage claims.