When are Commissions “Earned” Under the New York Labor Law?
Once the Court found that executives are covered by Section 193 of the Labor Law, it then needed to determine whether certain charges made against commissions violated that provision. The Court first sought to determine when a commission becomes “earned” and thus subject to Section 193’s prohibition against wage deductions. In making this determination, the Court looked to the common law, which provides that a “broker who produces a person ready and willing to enter into a contract upon his employer’s terms. . .has earned his commission.” However, an employer and employee are free to depart from the common law, and make a different arrangement for calculating commissions. Thus, the Court held that unless the parties expressly or impliedly contract otherwise, the common law rule applies that an employee “earns” his commission when he produces a person who is ready and willing to purchase the employer’s goods or services. However, if the parties expressly or impliedly agree to depart fro
