Legal Question in Business Law in California

Can the company I work for take back commissions paid out to me because of an interal mistake by the accounting department?

Thanks

Asked on 3/09/10, 12:14 pm

4 Answers from Attorneys

Robin Mashal HONG & MASHAL, LLP
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Disclaimer: The materials provided below are informational and should not be relied upon as legal advice.

If there was a bona fide error by the company, they should be able to correct it. If they over-paid you, then can take back the overpayment, and if they under-paid you, they should pay you what is owed to you. You should consult your own attorney to protect your legal rights.

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3/14/10, 2:18 pm
Edward Hoffman Law Offices of Edward A. Hoffman
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Probably, though I can imagine circumstances in which the answer would be no. Without more facts, that's the best I can do.

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3/14/10, 4:25 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law
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The general rule regarding mistaken overpayments, duplicate payments, etc. is that the person receiving the excess payment must return the excess to the person making the mistaken excess payment unless the person who got overpaid has materially altered his position in an honest, bona fide, and innocent belief that he was entitled to the overpayment. For example, if the executor of your rich uncle's will send you a million bucks as your inheritance, and you use it to pay off your mortgage, etc., and next month the executor calls and says it's a mistake, uncle only left you $1,000, you don't have to pay it back unless the executor can show that you knew your uncle hated your guts and never would have left you that much.

Same with commissions. If the company has overpaid you, you have to give it back unless you can show two things: (1) you honestly thought it was more or less the correct amount, and (2) in reliance upon your belief you were entitled to the money, you altered your financial affairs irretrievably and refunding the overpayment would be a great hardship.

You probably can't meet both tests.

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3/15/10, 8:22 am
Jonathan Reich De Castro, West, Chodorow, Glickfeld & Nass, Inc.
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Unless you have a written agreement that says otherwise, if it was an honest mistake the company can generally correct payment errors. It is no differnet than if you were an employee and the company made a mistake in your paycheck. If it was too low they would have to pay you the difference and if it was too high you would have to pay them back. It is no different with a commission. This generally does not change even if you spent the money already. If the amount was significant, or varried from some established formula, the company would also have the argument that you knew the commission was wrong. If it is a problem to pay back the whole difference at one time you can talk to the company about spreading it out over a couple of months. Finally, and perhaps most importantly, if you try and keep a commission that you are not entitled to the company might just say ok but don't expect work with us anymore. Is your job and your reputation worth the additional commission? Probably not. You should do the right thing and give them back the money you are not entitled to.

IMPORTANT NOTICE: The above response is not intended to, and does not, create an attorney-client, fiduciary or other confidential relationship with the responder. Neither does it constitute the providing of legal advice or services or the giving of a legal opinion by the responder. Such a relationship can only be created, and legal advice and/or legal services provided, pursuant to a written agreement with the responder. Accordingly, no obligations of any kind are assumed with respect to any matter or question presented. It should also be noted that legal issues are often time sensitive and legal rights may be lost or compromised if you do not act in a timely fashion.

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3/15/10, 9:19 am

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