Commission Pay Laws in Washington: Your Rights as a Commission Worker

The Fair Labor Standards Act (FLSA), 29 U.S.C. § 206, establishes that all employees—including those paid on commission—must receive at least the federal minimum wage ($7.25/hour) for all hours worked. Under the FLSA, hours worked means time during which an employee is required to be on the employer's premises or on duty, whether productive or not. The FLSA applies to employers with at least two employees engaged in interstate commerce. Commissions are considered wages under federal law and must be paid in accordance with the FLSA's requirements.

The Equal Employment Opportunity Commission (EEOC) enforces federal pay equity laws that apply to commissioned employees, including Title VII protections against discrimination based on sex, race, color, national origin, or religion in pay decisions. Under the FLSA, commissioned employees cannot have commissions withheld or forfeited as punishment for performance or conduct unless the employer has a clear written agreement permitting such deductions, and only if the deduction does not reduce the employee's earnings below the minimum wage for hours worked.

The Department of Labor oversees FLSA compliance and can pursue back pay claims on behalf of employees. Remedies under the FLSA include unpaid minimum wages, unpaid overtime (if applicable), liquidated damages equal to the unpaid wages, and attorney fees. Commission structures are permissible under federal law as long as the employee's total earnings—including commissions—meet or exceed the minimum wage requirement for all hours worked.

Washington Revised Code § 49.52.070 and § 49.52.100 establish strict requirements for commission payment that are more protective than federal law. Washington requires all wages—including commissions—to be paid at least twice per month on regularly scheduled paydays. The state minimum wage in 2024 is $16.28 per hour, significantly higher than the federal minimum of $7.25. Commissioned employees must earn at least this minimum wage for all hours worked, calculated on a monthly or annual basis.

Washington requires written commission agreements that clearly and conspicuously set forth: (1) the method of calculation, (2) the frequency and timing of payment, (3) conditions under which commissions may be forfeited or reduced, and (4) what happens to earned commissions upon termination. Washington state law presumes that commissions are earned property of the employee once the employee has performed the work that triggers the commission, even if the underlying sale is not completed or paid.

Under RCW 49.52.100, employers cannot forfeit or withhold commissions except in limited circumstances clearly specified in the written agreement. Importantly, Washington does not permit "clawback" of commissions for customer returns, chargebacks, or refunds unless the written agreement explicitly allows this and the deduction does not reduce the employee's total earnings below minimum wage. Commissions accrued upon termination—whether due to resignation or discharge—are considered earned wages and must be paid no later than the next regular payday or within 10 days of termination, whichever is sooner.

Washington's Department of Labor & Industries WAC 296-126-020 specifically classifies bonuses and commissions as wages subject to all wage protection laws. This means commissions are protected under the state's wage theft statute (RCW 49.52.070), which allows employees to recover unpaid wages plus penalties of up to 100% of the unpaid amount, plus attorney fees. Washington also prohibits any deduction from commission pay that would reduce total earnings below the state minimum wage, even if the employee agrees to the deduction in writing.

Washington law recognizes narrow exceptions to commission payment requirements. First, if a written agreement explicitly allows forfeiture of unearned or contingent commissions—for example, commissions on sales that fall through or customers who never pay—the employer may deny those commissions. However, this exception does not apply to commissions on sales that have been completed or customers that have been serviced; those are considered earned.

Second, independent contractors are not covered by Washington's wage laws, including commission requirements. However, Washington applies a strict test to determine contractor status under the ABC test codified in RCW 49.38.010 for certain occupations. An individual is presumed to be an employee unless the employer proves: (A) the worker is free to control work performance, (B) the worker performs work outside the employer's usual business, and (C) the worker is customarily engaged in an independently established occupation. Sales representatives, retail associates, and most commissioned salespeople fail the ABC test and are employees, not independent contractors.

Third, commissioned employees who are paid salaries (guaranteed minimum pay) rather than pure commission may have different calculations of minimum wage compliance. If an employee earns a salary plus commission, the salary may count toward minimum wage obligations, but only if the total compensation for hours worked meets the minimum wage threshold.

Fourth, federal law permits certain salaried executives, administrative employees, and professionals to be exempt from minimum wage requirements under the FLSA white-collar exemptions. However, Washington does not recognize these federal exemptions—commissioned employees in Washington must meet all state wage requirements regardless of job title or duties. Additionally, commissions on illegal transactions (gambling, unlicensed services) are not protected. Finally, employers may require commission clawbacks only if the underlying transaction is actually reversed or voided; mere customer dissatisfaction does not permit forfeiture.

Step 1: Document Everything. Keep detailed records of all commission earnings, including: the date work was performed, the transaction or sale that triggered the commission, the promised commission amount, the calculation method used, and the date the commission should have been paid. Save all emails, text messages, and written agreements discussing commission structure. Take screenshots of any online commission tracking systems. Create a spreadsheet listing each sale or transaction, the commission owed, and the date paid (or note if unpaid). Store these documents in a secure location outside of work.

Step 2: Attempt Internal Resolution. Request a written copy of the commission agreement from your employer and ask for a detailed written explanation of any disputed commissions, including the calculation and reasons for non-payment. Document this request in writing (email is ideal). Give the employer 10 business days to respond. Review your own records against their calculations to identify discrepancies. Do not resign or accept a severance package without addressing unpaid commissions—you may waive legal claims by signing settlement agreements.

Step 3: File a Complaint with Washington Department of Labor & Industries. Visit www.lni.wa.gov/workers-rights/wages-hours/wages-and-hours-complaints or call 1-800-4-WA-WAGE (1-800-492-9243). You will need to provide: your name and contact information, employer name and address, dates of employment, description of commission violations, total amount claimed, and copies of any written agreements or payment records. The complaint must be filed within three years of the violation. There is no filing fee. The Department will investigate the employer's payroll records and attempt to resolve the dispute.

Step 4: The Investigation Process. The Department of Labor & Industries will issue a notice of investigation to your employer. The employer has 20 days to respond with records and documentation. You may be contacted for additional information or clarification. The investigation typically takes 30-90 days. The Department issues a preliminary determination of whether wages are owed. Either party may appeal within 15 days. If the Department finds a violation, it issues an Order to Pay and may assess additional penalties (up to 100% of unpaid wages) and require payment of costs.

Step 5: When to Consult an Attorney. If the Department's investigation does not resolve the dispute, if the employer appeals the finding, or if the employer refuses to pay the final order, hire an employment attorney licensed in Washington. This is particularly important if the unpaid commission amount is substantial (over $5,000), the violation is ongoing, or the employer is retaliating against you for filing a complaint. Many Washington employment attorneys work on contingency (no upfront fee). An attorney can help you pursue additional damages, including penalties and attorney fees under RCW 49.52.070, and can represent you in Department appeals or civil court.