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Illegal "Charge Backs" to Commissioned Employees

Many employers in California, such as Xerox and Terminix, have a policy of "charging back" commissions against their sales employees' future commissions if a customer cancels a time contract.

For example, certain cell phone providers pay employees a commission for each cell phone plan that they sell to customers. Typically, these cell phone plans call for customers to sign up with the provider for a minimum of one year. However, if a customer cancels the contract before the expiration of the one year, the company will "charge back" the entire commission paid to the sales person while keeping the pro rata amount of the price paid by the customer for the company.

In doing so, the company is illegally placing the business risk of cancellations on the employee. This is illegal in California.

If you believe that you have been subjected to an illegal charge back, please complete the form below.
Published on Feb-4-04


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