Commission agreements often require workers to be actively employed on their payout date to receive commissions, putting earned pay at risk if an employee departs before then. In the April issue of HR Laws, Partner Jill Chasson explored a new Arizona federal court decision that casts doubt on whether those provisions are sustainable long term for local employers.

In her article, Jill analyzed a case involving a mortgage loan originator who resigned before certain commissions were paid, even though the loans had already closed. The court determined the employee could not recover the payment under Arizona’s wage statute, yet still found the forfeiture provision unconscionable under Arizona contract law. This decision confirmed that employers cannot withhold commissions once the work to earn them is complete and only payment remains.

Jill noted that the ruling, though issued by a single federal district court judge, draws on longstanding Arizona contract principles and may affect commission and bonus provisions tied to continued employment through a payout date. She advised employers to review compensation agreements carefully and work with counsel to ensure any provisions do not improperly result in forfeiture.

Well-versed in the many federal and state laws that govern the workplace, Jill regularly works with employers to develop key policies, resolve difficult personnel issues, and provide guidance regarding legal compliance and risk management. When disputes arise, she represents employers before administrative agencies, in arbitration proceedings, and court litigation regarding a variety of employment-related claims.

Read the full HR Laws article.