Is it legal for my employer to pay commission with no written plan?
Published September 10, 2026
The short answer
Whether a commission plan has to be in writing is decided state by state, and the states differ. California’s Labor Code §2751 says that where the contemplated method of payment involves commissions, “the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid”, and that the employer “shall give a signed copy of the contract to every employee who is a party thereto”. A state labor department is the place to ask which rule covers work performed there.
The usual answer to this is that commission is whatever was agreed, and that if nothing was written down then nothing was agreed. In some states that is close enough. In others there is a statute, and the statute says what has to be in the document as well as that there has to be one.
California’s is the clearest to read, so it is quoted here in full. It is not the only one — which is exactly why the answer to the question is a state, not a rule.
What does California’s statute actually require?
Three separate things, and the second is the one that tends to be missed: not just a written contract, but a written contract that sets out the method of computing and paying the commission. A plan that names a percentage and stops does not obviously satisfy that.
“Whenever an employer enters into a contract of employment with an employee for services to be rendered within this state and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid.”
What happens when a plan expires and everybody carries on?
This is the part of the section that is genuinely useful and almost never quoted. Where a plan runs out and both sides keep working under it, the statute presumes the old terms are still the terms — which means an out-of-date copy someone kept can still be the document that matters.
“The employer shall give a signed copy of the contract to every employee who is a party thereto and shall obtain a signed receipt for the contract from each employee. In the case of a contract that expires and where the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.”
Does the word “commission” mean what it usually means?
Not quite, and the section says so. It carves several familiar things out of its own definition, so a payment that everyone in an office calls commission may sit outside the statute.
“For purposes of this section only, “commission” does not include any of the following: (1) Short-term productivity bonuses such as are paid to retail clerks. (2) Temporary, variable incentive payments that increase, but do not decrease, payment under the written contract. (3) Bonus and profit-sharing plans, unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.”
How do I find out what my own state requires?
By asking the state labor agency where the work is performed, which is linked below. The rules are not similar enough to guess from a neighboring state, and the requirement in one place can be a bare writing requirement while in another it specifies who signs it and how long it is kept.
This site keeps state pages of its own for the states that have been read and checked. They say plainly which ones have not been, because “we have not checked this state” and “there is no requirement in this state” are different sentences and only one of them is true.
What is worth keeping while the plan is unwritten?
Every version of the plan that ever arrived, dated — including the superseded ones, for the reason the statute gives above. Then each deal as it closes: the customer, the value, the close date, the order number, and what the plan said the share was at the time.
A deal with a paper trail is a specific record; one that can only be described is a recollection. That is the difference the statute is reaching for when it requires a signed copy to change hands.
Where this is decided
The state labor department where the work is performed
Ask the state labor agency what its own rule is. State rules sit on top of the federal ones and are frequently stricter, and the state agency is the only place that can say which applies to work performed there.
Contact detailsSources read for this answer
- California Labor Code § 2751
California Legislative Information · Amended by Stats. 2012, Ch. 826, Sec. 1. (AB 2675) Effective January 1, 2013. · read September 10, 2026
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB§ionNum=2751
About this answer
What is written above is general information about a rule that exists. It is not written about anybody's particular job.
It does not say what any particular employer owes anyone. That turns on facts this page has never seen — the hours, the agreement, the state the work was done in — and on how somebody with the authority to decide reads them.
Rules differ from one state to the next, and they change. Every quotation above says what that document said on the date printed beside it, which is not the same as saying what it says today.
Where anything on this page and the official source disagree, the official source is the one that counts. The office named further up decides; this page only points at it.
Whichever way that goes, the thing an agency, a union or an attorney asks for first is a dated record of what actually happened, written down while it was happening.
Keep your own record of it
Every version of the plan that ever arrived, and each deal as it closes — the customer, the value, the close date, and what the plan said the share was at the time. The statute above is the reason the out-of-date copies matter as much as the current one.
Start a record of the dealsFree to start, and no account until you choose to keep it. Private to you — nobody is contacted or notified.