In determining the portion of the remuneration that constitutes commissions, all income resulting from the application of a bona fide rate of commission is considered to be commission on goods or services, whether the commissions charged exceed the draw or guarantee. Employers must publish a carefully crafted bonus or commission policy. Any bonus or commission policy must be disclosed to employees through a written manual, employment contract, or stand-alone bonus or commission agreement. In order to meet employee expectations and minimize the risk of future conflicts, the guideline writes: The payment of commissions can cause difficulties to employers because commissions are salaries. Employers who do not have a written commission agreement with their employees or who have a poorly designed policy can be very costly. If an employer fails to pay wages of any kind on time and correctly, the employer may face triple damages (penalty of 10% for each day late, up to twice the amount owing), costs incurred by the employee to recover wages, reasonable attorneys` fees, and interest. Generally, an employee is entitled to a commission if an order is accepted by the employer, even if the employee is terminated before payment. The general rule can be changed by a written agreement of the parties or by the behavior of the parties, which clearly defines another event where commissions are earned, such as: the employer receives full payment, delivery of products or services, etc. A terminated employee is not entitled to commissions on orders received after separation. However, commissions earned must be paid upon termination. Employers should be aware of the contracts they may have with a client, as commissions can continue long after an employee is fired or for the duration of the business. Again, make sure you understand the payroll laws of the states where your employees live.
(2) More than half of the employee`s compensation for a representative period (at least one (1) month) represents commissions on goods or services. If you are a contract employee, such as a pharmaceutical or medical device representative, your employer should pay you according to the terms of your employment contract. While most employers pay their employees fairly, you may find yourself in a situation where you haven`t received the money your employer owes you for your work. If this happens, you have rights under Indiana labor laws. A commission fact sheet is available on the Payroll and Hours of Work website. A sales commission is a sum of money paid to an employee after completing a task, usually by selling a certain amount of goods or services. Employers sometimes use sales commissions as an incentive to increase employee productivity. A commission may be paid in addition to or instead of a salary. The Fair Labour Standards Act (FLSA) does not require the payment of commissions.
All commission, incentive and bonus plans must be documented. A well-formulated plan or policy can save your business money in the long run. Keep in mind that you don`t have a well-written plan to pay salaries when they`re earned. So be sure to include information such as: how commissions, incentives or bonuses are calculated, what sales are attributed to the employee by territory or per customer, what happens if there is a shared commission, incentive or bonus situation, what happens if a customer fails to make a payment for a sale, what happens in a return or credit situation, What goals must be met to get an incentive, when an employee must be hired to receive the salary, etc. Making sure the written plan is simple and easy to understand is crucial to its success. Make sure employees understand the rules of the game in advance, and this will help limit your liability as an employer in the long run. For employee debts that cannot be recovered through wage allowances, the Indiana employer must issue the employee a full paycheck, but may require the employee to repay loans, pay for goods or services purchased by the employee, or pay for damage to business property. An employer can fire the employee or sue for non-repayment of this type of debt. Vacation pay can be “pay” under Indiana law. In certain circumstances, unused holiday pay will be salary. Indiana law does not require employers to provide vacation benefits, and employers offering paid leave can legitimately establish a policy that employees will not receive payment for accrued and unused leave upon termination. See Indiana Heart Associates, P.C.
v. Bahamonde, 714 N.E.2d 309 (Ind. App. 1999); Die & Mold, Inc. v. Western, 448 N.E.2d 44 (Ind. App. 1983). An employer`s policy may also state that employees who quit, are terminated “for cause” or fail to meet a two-week notice period will not receive payment for unused leave.