What Are Unpaid Commission Disputes?
Definition for Colorado Employees: In Colorado, sales commissions are considered “wages” or “compensation.” A dispute occurs when an employer fails to pay earned commissions that are “vested and determinable” under the terms of the employment agreement. The Colorado Wage Act protects employees from having these earned wages wrongfully withheld.
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When is a Sales Commission Legally Earned in Colorado?
Under Colorado commission based pay laws, determining when a commission is officially earned depends on several legal factors, including:
The “No Forfeiture” Rule
Employment agreements cannot force you to forfeit earned wages. In Barnes v. Van Dyne Oil Co (and Barnes v. Van Schaak Mortg.), the Colorado court ruled that any contract clause attempting to forfeit earned commissions violates the Wage Act (C.R.S § 8-4-125) and is unenforceable. If you did the work, the money is yours.
Conditions of Payment vs. Earning
Employers often try to delay payment to avoid liability. In Hallmon v. Advance Auto Parts, Inc., the court distinguished between when a commission is “earned” versus when it is “payable.” Even if a policy says you must be employed “at the time of payout,” you may still be entitled to the commission if you had already done the work required to earn it before you were fired.
Discretionary Bonuses Can Be Binding
Even if your contract says a bonus is “discretionary,” an employer’s conduct can create a binding obligation. In Burnett v. Finance of America Mortgage, LLC, the U.S. District Court found that an employer cannot arbitrarily revoke compensation once an employee has performed the labor and received approval.
Can I Sue for Unpaid Commissions Under the Colorado Wage Act?
Yes. The Colorado Wage Act provides powerful tools for employees to recover unpaid commissions, including penalties that can double or triple the amount you are owed.
Key Colorado Statutes Protecting Your Pay
- C.R.S. § 8-4-101: Explicitly defines commissions as “wages” or “compensation,” granting them full legal protection.
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C.R.S. § 8-4-109: Requires employers to pay all earned commissions immediately upon termination (or within 14 days depending on the specific circumstances).
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C.R.S. § 13-21-1304 (Wholesale Representatives): This statute is critical for independent wholesale reps. It holds manufacturers liable for treble (3x) damages if they knowingly fail to pay commissions.
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Wage Theft Transparency Act: Makes final determinations against employers who violate wage laws public, adding reputational pressure to your legal claim.
Precedent in Your Favor
Our firm utilizes established case law to dismantle employer defenses.
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Peak Building Solutions: Established that if an employer refuses to pay commissions after a demand is made, they are liable for penalties.
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Nieto v. Clark’s Market, Inc.: The Colorado Supreme Court confirmed that an employee need not prove “vesting” if the bonus was earned—meaning awarded in return for services rendered.
Contact Our Denver Employment Lawyers for a Free Consultation
Your commissions are your property. Under Colorado law, you have a limited window to recover unpaid wages and potentially pursue attorney fees and penalties.
Do not negotiate with your employer alone. Contact the Employment Law Team at Baird Quinn LLC, we have evaluated hundreds of commission plans and litigated against companies of all sizes.
Frequently Asked Questions About Colorado Commission Pay Laws
What are the labor laws for commission-only employees in Colorado?
Under Colorado commission based pay laws, commission-only employees are still protected by the Colorado Wage Act. Even if you do not receive a base salary, your employer cannot legally withhold commissions that you have fully earned according to the terms of your employment agreement. Furthermore, commission-only employees must still be paid at least minimum wage for all hours worked.
Can my employer change my commission plan retroactively?
No. In Colorado, an employer cannot retroactively change a commission plan to deny you payment for work you have already performed. They can legally alter the commission structure, but only for future sales and work.
Do I still get my commission if I am fired before it is paid?
Generally, yes. If you have done the work required to “earn” the commission before you were terminated or resigned, the employer must pay it. Contract clauses that attempt to force you to forfeit earned wages simply because you are no longer employed are void under Colorado law.
What is the penalty for unpaid commissions in Colorado?
If an employer willfully withholds earned commissions after a formal demand is made, they may be liable for the unpaid amount plus severe statutory penalties. Under the Colorado Wage Act, this can equal up to two or three times the amount of the unpaid wages, plus your attorney fees.