Payment of Commission After Termination in 2025: What the Law and Your Contract Say

Introduction

You closed a huge deal. It took months of chasing, negotiating, and onboarding. Two weeks later, you're let go. When payday rolls around, your base salary arrives, but the commission? Nowhere to be seen.

This is more common than you'd think.

In one discussion, a former sales representative shared how they spent six months nurturing an enterprise deal. After closing it, they were abruptly terminated and later told that they were not employed when the client paid, and so they did not qualify. Others chimed in with similar experiences: deals closed, quotas hit, but commissions withheld due to vague contract language or silence on post-exit payouts.

So here’s the real question: Are you legally entitled to your commissions after you leave or are terminated?

The answer depends on several things: whether your sales commission was “earned” before termination, what your contract says, and what your state’s labor laws protect.

In this blog about payment of commissions after termination, we’ll help you make sense of it all. You’ll learn:

• What counts as an “earned” commission under the law
• When forfeiture clauses are legal
• How states like California, Florida, Ohio, and New York differ
• What to do if your employer won’t pay

Let’s start by understanding what really happens when employment ends.

Will You Lose Your Commission After Termination?

Payment of commissions after termination depends on whether the commission was legally earned before the employee left. Most states treat earned commissions as wages. If a sales milestone was met or a contract was closed before termination, payment is typically required. 

Employment agreements and state laws define eligibility. Forfeiture clauses may apply but are not always enforceable. Clear, written commission plans reduce disputes. Laws vary by state, including in California, Florida, New York, and Ohio. Understanding your rights under contract and labor law helps protect earned income after resignation or termination.

In most cases, if you've completed the required task like closing a sale or securing a signed contract before your last day, that commission may be legally owed. But don’t assume all commissions are protected.

Many employers insert clauses that tie payouts to continued employment. Some states honour those clauses, while others override them in favour of employee protection.

To find out whether you’re owed payment, you need to evaluate three things: if your commission was “earned,” how your contract defines it, and whether your state’s law supports your claim.

3 Key Factors That Determine If You Lose Your Commission

1. Was the Commission “Earned” Before Termination?

A commission is typically “earned” when you fulfill a defined performance trigger, such as closing a deal, receiving full customer payment, or delivering the product or service. If that trigger happens before your employment ends, the commission is often considered legally yours, as confirmed by multiple state rulings and employment law firms that specialize in wage disputes.

In some states, this is reinforced by the procuring-cause doctrine, which holds that if your actions directly led to a sale, you may be entitled to the commission even if the sale is finalized after you leave. Courts in Texas, for instance, have consistently applied this principle in favor of terminated salespeople.

That said, your contract can complicate things. Some agreements explicitly require you to be employed when the client pays. That brings us to the next factor.

2. Is the Commission Plan Clearly Defined in Writing?

A clearly written agreement can mean the difference between a smooth payout and a legal dispute. If the plan is verbal, vague, or missing essential details, employers can exploit that ambiguity.

Your commission plan should define:

• What “earned” means in your context (e.g., deal signed, money received, delivery completed)
• When payouts are made
• What happens in case of resignation or termination
• Whether continued employment is a condition

If it doesn’t spell these out, courts may defer to state law or legal doctrines, making the outcome less predictable.

This is especially important in industries like software sales, where deal sizes are large, cycles are long, and commissions often extend beyond a rep’s employment period. Without clearly defined structures, disputes over post-termination payouts become far more common.

Key tip: If you’re managing a large sales team, using a platform like Everstage can help automate and document all commission structures with zero ambiguity. The platform ensures every term, like “earned,” “payout date,” and eligibility, is clearly tracked and applied, reducing legal and operational risks.

3. What Does State Law Say?

Finally, your state’s stance matters, sometimes more than your contract.

• California and New York offer strong protections, requiring payout of earned commissions after termination.
• Florida and Ohio tend to prioritize the contract language.
• Some states set specific timelines for payment, while others do not.

Knowing your state law gives you a clear view of your rights and your risks.

Understanding Forfeiture Clauses in Commission Agreements

Forfeiture clauses are a common but often misunderstood part of commission plans. These clauses can block you from receiving your commission if you're no longer employed on the payout date, even if you closed the deal.

But here’s the catch: not all forfeiture clauses are enforceable, especially in states where labor laws classify earned commissions as wages.

What Is a Forfeiture Clause?

A forfeiture clause is a condition in your commission agreement that says: you only get your commission if you are still employed when the company issues the payout.

These clauses are commonly used in industries where large deals have long closing or payment cycles. Employers include them to avoid paying commissions to reps who have already left the company when the payment is processed.

But here is where the problem begins:

• You may have already completed all the work
• The customer may have signed, paid, or received service
• Yet the employer may deny your commission due to your termination date

This is where state wage laws come into play. In states that treat earned commissions as wages, like California, Massachusetts, or New York, employers are not allowed to withhold commissions simply because of a forfeiture clause.

Courts often consider whether your efforts directly led to revenue. If they did, withholding the payout may violate wage laws, even if your agreement includes a forfeiture clause.

In essence, the enforceability of these clauses comes down to two things: whether the commission was earned, and whether the clause aligns with your state’s labor code.

Are These Clauses Enforceable by the State?

Each state takes a different approach when it comes to enforcing forfeiture clauses. Some prioritize wage protections. Others defer more heavily to contract language.

States that often invalidate forfeiture clauses:

• California: Treats earned commissions as wages. Under Labor Code § 200–204, employers cannot contract around the obligation to pay wages already earned.
• Massachusetts: Focuses on whether the employee fulfilled their part. If the work is done and the employer benefited, the clause is unlikely to be upheld.
• New York: Offers stronger post-termination protection under Labor Law § 191-c. Commissions that have become due must be paid within five business days.

States more likely to uphold forfeiture clauses:

• Florida: Courts in Florida tend to uphold clear, well-defined contracts. If your agreement states that you must be employed at payout, that clause could be valid. As noted by Gallup Law, Florida courts defer to what is written, unless it clearly violates state wage law.
• Ohio: Similar to Florida. The courts examine whether the clause is fair, clear, and consistent with the contract overall.

What this means for you:

• If your state treats commissions as protected wages, the clause may be overridden by law.
• If your state favors contract freedom, you will need to rely more on the exact wording and your ability to challenge it.

Understanding this state-by-state variation is essential to evaluating your legal options.

What If You Signed One?

Signing a commission agreement with a forfeiture clause does not automatically mean you lose your right to get paid.

What matters is whether that clause holds up against your state’s wage laws, and whether you met the conditions that define your commission as earned.

If you’re in California or Massachusetts:

• Wage law protections take priority.
• If you completed the work and met the terms of the sale, the clause may not be enforceable.

If you’re in Florida or Ohio:

• Your contract terms will be scrutinized more closely.
• If the language is specific and reasonable, courts may allow the clause to stand.

Here’s what you can do if you’ve signed a forfeiture clause:

1. Review the clause carefully.

Look for specific conditions around what “earned” means and whether continued employment is explicitly required.

2. Document your performance.

Prove that your actions directly led to the revenue, even if the payout came after you left. Use CRM logs, emails, or client updates.

3. Check your state law.

If the clause contradicts wage protections in your state, your legal standing may be stronger than it appears.

Some employees have successfully challenged forfeiture clauses by demonstrating that the payout was delayed by internal processes, not a lack of performance. Courts are more likely to support your claim when you show the clause was used as a technicality to avoid rightful compensation.

What Does “Earned Commission” Mean?

The term “earned commission” is central to every post-termination commission dispute. But what actually counts as earned?

The answer depends on two things:

• How your commission agreement defines it
• How your state law interprets it

Some employers try to delay when a commission is considered earned, using vague or one-sided definitions. Others fail to define it at all, which pushes the matter into the courts. 

Let’s break down how different states handle this and when legal doctrines can override unclear contracts.

State Definitions of “Earned”

States differ widely in how they define when a commission is considered legally earned. In some, it’s earned as soon as the sale is signed. In others, it may require full payment or final service delivery.

Here’s how key states approach it:

California:

Commissions are treated as wages once earned. According to California Labor Code § 200–204, an employer cannot withhold earned commissions even after termination. The earning trigger must be fulfilled, and if the agreement lacks clarity, courts assess industry norms and employee duties.

New York:

New York Labor Law § 191-c defines earned commissions based on the contract. If the conditions in the agreement are met, the employer must pay within five business days. When contracts are unclear, New York courts tend to side with the employee based on actions completed before termination.

Ohio:

This state gives more power to contracts. Ohio Revised Code § 1335.11 requires that earned commissions be paid within 30 days after termination, and future commissions within 13 days of becoming due. Willful nonpayment can trigger treble damages and attorney’s fees.

Florida:

Florida lacks a specific commission statute but enforces F.S. 448.08, which allows recovery of attorney’s fees in wage disputes. Courts typically uphold written commission terms, but if the agreement is silent, earned commissions must still be paid as a matter of contract law and past performance.

Massachusetts:

Massachusetts treats commissions as wages under M.G.L. c. 149 § 148. If the employee has met the performance terms, commissions must be paid, even if the employer issues the check after separation.

In short: clearly defined agreements help, but state laws will step in where silence or ambiguity exists.

Key tip: To avoid disputes around what qualifies as “earned,” companies can use Everstage’s Commission Processing engine to automate milestone tracking and apply commission logic consistently. This removes guesswork from post-termination eligibility and protects both reps and revenue teams.

Procuring-Cause Doctrine Explained

When commission plans are vague or silent, courts often turn to the procuring-cause doctrine to resolve disputes.

This doctrine holds that if your actions directly led to a sale, even if it closed after you left, you may still be entitled to the commission. Courts in states like Texas, Illinois, and Georgia have upheld this principle to protect reps whose efforts initiated and drove deals forward.

Here’s how it works in practice:

• You found and developed the lead
• You built the relationship and scoped the deal
• You left the company before the contract was signed
• The deal closes shortly after

If your involvement was the decisive factor in winning the sale, and your contract doesn’t clearly deny post-termination payment, courts may rule in your favor.

For example, in a 2022 case in Texas, a rep secured a multimillion-dollar account, was let go before the deal closed, and still won the commission in court because they were the “procuring cause.”

However, if your agreement clearly states that payment requires you to be employed at the time of signature or payout, courts may default to that unless state wage law says otherwise.

The procuring-cause doctrine often acts as a fallback. When your agreement is silent or ambiguous, this principle can help protect your right to compensation.

When You Might Forfeit vs. When You’re Likely Still Owed

Knowing when you’ll lose or keep your commission depends on the details. Here's a breakdown of the most common scenarios:

You might forfeit your commission if:

• Your contract clearly requires active employment on the payout date
• You were terminated for cause, and the agreement links that to loss of commission
• The sale or service was not fully completed before you left
• Your state favors contract terms over employee protections

In these situations, employers often rely on contract clauses such as: “Employee must be employed at the time of client payment.”

If this clause is written clearly and aligns with your state’s contract law, your claim may be denied.

You’re likely still owed your commission if:

• You met the earning condition before leaving (deal closed, service delivered, or trigger met)
• The contract is silent or unclear on post-termination payment
• Your state classifies earned commissions as wages regardless of your employment status
• You were the procuring cause of the deal, and no enforceable forfeiture clause applies

For example:

• In New York, Labor Law § 191-c requires payment within five business days once the commission is due, whether you are still employed or not.
• In Massachusetts, Section 148 mandates that earned wages, including commissions, be paid promptly upon separation.

Key tip: Understand your triggers. Know when commissions are considered earned. Don’t assume a missed paycheck means your claim is over.

State-by-State Summary of Commission Payment Laws

Statutory Timing and State Laws for Commission Payments

Even if a commission is legally earned, when you actually receive it can depend on state-specific payout rules. Some states require employers to pay all final wages, including commissions, within a few days of termination. Others allow more flexibility, especially if the commission payment schedule is tied to client billing cycles.

In this section, we’ll cover how fast states pay commissions after you leave, how long your employer has to pay, and what penalties apply for late or withheld payment.

How Quickly Should You Be Paid After Leaving? (By State)

Let’s say your commission is earned and contractually valid — the next question is when you’ll get it. The answer depends entirely on state-specific wage payment laws. Some states require same-day or next-payday payouts after termination, while others offer no statutory deadline, deferring instead to whatever’s in your contract.

Here’s how five key states approach final commission payouts after termination:

California

You must be paid immediately upon termination, or within 72 hours if you resign without notice, per Labor Code § 204. Earned commissions fall under “wages,” and late payments can trigger waiting time penalties of up to 30 days’ pay under § 203.

New York

Under Labor Law § 191-c, employers must pay due commissions within five business days after they become payable. Non-payment can result in double damages and legal fees.

Massachusetts

Commissions that are “definitely determined” and “due and payable” must be paid by the next regular payday, as outlined in M.G.L. Ch. 149 § 148. Failure to pay can result in triple damages under § 150.

Florida

No fixed payout window exists. Timing is based on your contract. If it doesn’t specify when commissions are due, your employer can legally delay payment unless you prove breach of contract.

Ohio

Similarly, Ohio lacks a firm legal deadline. Unless your contract includes a commission payment schedule, there’s no clear payout timeline enforced by state law.

Commission Payment Timing Table

To make this easier to compare, here’s a simplified table outlining when commissions must be paid after termination in the five key states covered in this guide:

Quick insights:

• States like California, New York, and Massachusetts treat commissions as part of wages, which gives employees stronger legal recourse.
• Florida and Ohio lean more on contract interpretation. If your contract is silent, you may face delays without penalties for the employer.

Employers operating in multiple states often draft commission agreements to comply with the strictest applicable state, but it’s your state of employment that usually governs your rights.

How to File a Wage Claim for Unpaid Commissions

When your former employer refuses to pay a commission you’ve rightfully earned, you’re not out of options. Most U.S. states offer formal wage claim processes that can help you recover unpaid commissions, often without needing a lawyer or filing an expensive lawsuit.

This section breaks down how to act, where to file, and when it’s time to get legal help.

Step-by-Step Action Plan

Before you file a formal complaint, take these key steps to strengthen your claim:

1. Review Your Commission Agreement:

Check for any clauses on when commissions are earned, whether employment is required for payout, and how disputes are handled.

2. Gather Documentation:

Collect offer letters, emails confirming deals, commission plans, CRM logs, and anything that proves you earned the sale.

3. Reach Out Internally:

Contact your HR department or former manager with a written request detailing your unpaid commission and attaching documentation. Always keep a copy of your message.

4. Wait for Response:

If the company responds in writing with a rejection, you may need it later as evidence. If they ignore your message, document that too.

5. Decide Where to File:

Based on your state, you can often choose between a state labor agency or filing a small claims court case.

State Labor Agency Resources

Each state has its own process for wage claims, but most allow you to file online or by mail. Here are some links to get started:

• California: DLSE Wage Claim Filing
• New York: NY DOL Labor Standards Complaint
• Florida: State Attorney General Complaints (Florida doesn’t have a DOL equivalent; use civil courts)
• Ohio: Wage & Hour Bureau
• Massachusetts: Attorney General’s Fair Labor Division

Most states allow you to submit complaints free of charge, and many agencies will reach out to the employer on your behalf before escalating.

If the commission amount is substantial or the company contests it, it might be time to escalate further.

When to Contact a Lawyer

If your unpaid commission is significant (e.g., $5,000+), or if your employer retaliates or ignores agency orders, consulting a lawyer may be your best option.

A qualified employment lawyer can:

• Evaluate the enforceability of your contract
• File a lawsuit under state wage laws (some allow double or treble damages)
• Represent you in a labor board hearing or small claims court

Some lawyers take these cases on a contingency basis, meaning they only get paid if you win or settle. You can also consult legal aid groups in your state for free support if you meet income qualifications.

Still unsure whether to escalate? Take this example. 

In Perthuis v. Baylor Miraca Genetics Laboratories, LLC (Texas Supreme Court, 2022), the court held that when a commission plan is silent on post-termination payments, the procuring-cause doctrine applies. Because the rep’s efforts set in motion the sale, he remained entitled to commissions on sales that closed after his termination. 

This underscores how solid documentation, state law, and strategic legal counsel can secure payment of earned commissions even post-exit.

Conclusion

When it comes to the payment of commissions after termination, one thing is clear: if a commission is legally earned, it must be paid, even after the employment ends. However, the specifics depend on your state laws, the language in your commission agreement, and whether any forfeiture clause is valid under local statutes.

In states like California and Massachusetts, labor laws offer strong protection to employees by classifying earned commissions as wages. Employers are required to pay them regardless of termination. On the other hand, states like Florida and Ohio place more emphasis on what the contract says, which means the details of your agreement carry more weight.

Here’s what you can do to safeguard your rights:

• Make sure your commission plan is documented in writing
• Understand what counts as "earned" under your contract
• Learn how your state treats commission payments
• Take timely action if payments are delayed or withheld

If you're a sales or revenue leader, the best approach is to avoid ambiguity in the first place. Everstage gives your team full visibility into earnings, targets, and payout timelines. It helps eliminate confusion, reduce disputes, and keep everyone aligned on what’s owed and when.

Want to simplify commission transparency and compliance?

Talk to us at Everstage and see how we can help your team stay confident, compliant, and commission-ready.

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