Is it legal for a company paying commissions on a product (along with a salary) to a salesman to withhold and not pay out that commission when the salesman leaves the company?

Question: Is it legal for a company paying commissions on a product (along with a salary) to a salesman to withhold and not pay out that commission when the salesman leaves the company?. The present "policy"of this company states that when a salesman is hired he recieves any previous commissions owed to the salesman he replaced. Anyone leaving the company forfeits that commission to the person replacing him. I've been told this is illegal...is this correct??

Answer: If you are employed in North Carolina, your employer can require you to forfeit earned commissions only if they notify you of the forfeiture in advance and in writing. You should check your employer's handbook or policy manual to ensure that this notice is in writing. (Or check on any postings in common areas at your company). If you have an offer letter that states you will forfeit commissions upon termination, that would also comply with NC law (i.e., if that is the case then you could be required to forfeit the commissions).

This is an issue that varies greatly from state to state. In certain states outside North Carolina, such as Maryland and California, you likely could not be required to forfeit those commissions. If you are employed outside NC then you should contact your state's department of labor.

If you still want to look into this further and are employed in North Carolina, then contact the state's department of labor - 1-800-NC-LABOR.

Good luck and I hope this helps.