Court Of Appeal Confirms Employer Right to Recover Advanced Commissions

The First District Court of Appeal clarified that an employer with a properly crafted commission agreement can recover commission payments already advanced to employees for commissions the employee did not earn. Here, four former employees filed a class action alleging their compensation plans (that offset unearned commissions against current payments) violated various provisions of the Labor Code. After a court trial, the trial judge ruled in favor of the employer on both the complaint and its cross complaint (for uncollected chargebacks). In Koehl, et al. v. Verio, Inc., the Court of Appeal in San Francisco upheld the trial court determination that the compensation plans did not violate the Labor Code.