Bonuses and Commissions as Wages
C.R.S. 8-4-101(14)(a)(I) defines wages or compensation as "all amounts for labor or service performed by employees, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method...No amount is considered to be wages or compensation until such amount is earned, vested, and determinable..."
C.R.S. 8-4-101(14)(a)(II) additionally defines bonuses and commissions as wages or compensation when earned for labor or services performed in accordance with the terms of any agreement between an employer and employee.
Payment of Bonuses and Commissions Upon Separation from Employment
C.R.S. 8-4-109 (1) and C.R.S. 8-4-109 (2) provide the following guidance on payments upon separation from employment:
When an interruption in the employer-employee relationship by volition of the employer occurs, the wages or compensation for labor or service earned, vested, determinable, and unpaid at the time of such discharge is due and payable immediately...Nothing in the section above requires the payment at the time employment is severed of compensation not yet fully earned under the compensation agreement between the employee and employer, whether written or oral.
General Guidance from Case Law
The following examples of case law may not apply to every dispute involving commission wages.
Commissions are due at the time they are fully earned. At the time the employment relationship is severed, an employer need not pay, immediately, compensation not yet fully earned under a compensation agreement. But the implication is clear that such wages become immediately due at the time they are fully earned (Hofer v. Polly Little Realtors, 1975).
If a sale closes after an employee's termination, a prima facie case for entitlement to commissions is made where the employee has established that he would have been entitled to the commissions had he not been terminated (Schaefer v. Horton-Cavey, 1984).
Summary
Non-discretionary bonuses and commissions, earned in accordance with the terms of any agreement, are viewed as wages or compensation. Upon separation from employment, bonuses and commissions must be paid at the time they are earned, vested and determinable.
Overtime
For information regarding overtime pay for employees who earn commissions or bonuses, please visit the Overtime page on this website.
References
- Colorado Overtime and Minimum Pay Standards Order ("COMPS Order") #38)
- C.R.S. 8-4-101(14)(a)(I)
- Hofer v. Polly Little Realtors, 543 P.2d 114 (Colo. App. 1975)
- Schaefer v. Horton-Cavey, 692 P.2d 1132 (Colo. App. 1984)
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