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Louisiana Legislature Updates How to Handle Commissions, Incentive Pay, and Bonuses

Effective August 1, 2024, the Louisiana Legislature has changed the rules for determining what compensation is “due” to an employee at the time of that employee’s termination, giving employers the right to clarify by written policy when commissions, incentive pay, and bonuses are due. Now more than ever, employers must ensure that they have clearly drafted written policies regarding how commissions, incentive pay, and bonuses are earned and paid to employees.

Under Louisiana law, employees must be paid all amounts due by either the next regular payday or 15 days after the date of termination, whichever occurs first. The new law provides that commissions, incentive pay, and bonuses are considered an “amount due” to the employee only if, at the time of separation, the compensation has been earned and not modified in accordance with a written policy. Importantly, this law provides that such compensation is only due if it is earned at the time of separation. Additionally, the employer can lawfully establish a written policy that (1) provides for adjustments to the amount due to the employee based on changes to the order generating the commission; (2) provides that a payment is not earned unless and until the employer has received the payment which generates the commission, incentive pay, or bonus.

This law can be best explained by way of example. If Bob the software salesperson had finalized the sale of a piece of software, his employer had a policy allowing 30 days for the customer to make the payment on that sale, and Bob was terminated on day 20 before the customer paid for the software, then Bob arguably would not be entitled to the commission, if his employer had a written policy providing that no commission is earned until after it has received the payment.

Under this new law, employers should ensure that their written commission, incentive pay, and bonus policies are carefully reviewed. For those employers who do not have a written policy regarding these forms of compensation, such written policies should be prepared as soon as possible to ensure that employers are protected under this new law.

Louisiana Legislature Updates How to Handle Commissions, Incentive Pay, and Bonuses

Effective August 1, 2024, the Louisiana Legislature has changed the rules for determining what compensation is “due” to an employee at the time of that employee’s termination, giving employers the right to clarify by written policy when commissions, incentive pay, and bonuses are due. Now more than ever, employers must ensure that they have clearly drafted written policies regarding how commissions, incentive pay, and bonuses are earned and paid to employees.

Under Louisiana law, employees must be paid all amounts due by either the next regular payday or 15 days after the date of termination, whichever occurs first. The new law provides that commissions, incentive pay, and bonuses are considered an “amount due” to the employee only if, at the time of separation, the compensation has been earned and not modified in accordance with a written policy. Importantly, this law provides that such compensation is only due if it is earned at the time of separation. Additionally, the employer can lawfully establish a written policy that (1) provides for adjustments to the amount due to the employee based on changes to the order generating the commission; (2) provides that a payment is not earned unless and until the employer has received the payment which generates the commission, incentive pay, or bonus.

This law can be best explained by way of example. If Bob the software salesperson had finalized the sale of a piece of software, his employer had a policy allowing 30 days for the customer to make the payment on that sale, and Bob was terminated on day 20 before the customer paid for the software, then Bob arguably would not be entitled to the commission, if his employer had a written policy providing that no commission is earned until after it has received the payment.

Under this new law, employers should ensure that their written commission, incentive pay, and bonus policies are carefully reviewed. For those employers who do not have a written policy regarding these forms of compensation, such written policies should be prepared as soon as possible to ensure that employers are protected under this new law.

Louisiana Legislature Updates How to Handle Commissions, Incentive Pay, and Bonuses

Effective August 1, 2024, the Louisiana Legislature has changed the rules for determining what compensation is “due” to an employee at the time of that employee’s termination, giving employers the right to clarify by written policy when commissions, incentive pay, and bonuses are due. Now more than ever, employers must ensure that they have clearly drafted written policies regarding how commissions, incentive pay, and bonuses are earned and paid to employees.

Under Louisiana law, employees must be paid all amounts due by either the next regular payday or 15 days after the date of termination, whichever occurs first. The new law provides that commissions, incentive pay, and bonuses are considered an “amount due” to the employee only if, at the time of separation, the compensation has been earned and not modified in accordance with a written policy. Importantly, this law provides that such compensation is only due if it is earned at the time of separation. Additionally, the employer can lawfully establish a written policy that (1) provides for adjustments to the amount due to the employee based on changes to the order generating the commission; (2) provides that a payment is not earned unless and until the employer has received the payment which generates the commission, incentive pay, or bonus.

This law can be best explained by way of example. If Bob the software salesperson had finalized the sale of a piece of software, his employer had a policy allowing 30 days for the customer to make the payment on that sale, and Bob was terminated on day 20 before the customer paid for the software, then Bob arguably would not be entitled to the commission, if his employer had a written policy providing that no commission is earned until after it has received the payment.

Under this new law, employers should ensure that their written commission, incentive pay, and bonus policies are carefully reviewed. For those employers who do not have a written policy regarding these forms of compensation, such written policies should be prepared as soon as possible to ensure that employers are protected under this new law.

Louisiana Legislature Updates How to Handle Commissions, Incentive Pay, and Bonuses

Effective August 1, 2024, the Louisiana Legislature has changed the rules for determining what compensation is “due” to an employee at the time of that employee’s termination, giving employers the right to clarify by written policy when commissions, incentive pay, and bonuses are due. Now more than ever, employers must ensure that they have clearly drafted written policies regarding how commissions, incentive pay, and bonuses are earned and paid to employees.

Under Louisiana law, employees must be paid all amounts due by either the next regular payday or 15 days after the date of termination, whichever occurs first. The new law provides that commissions, incentive pay, and bonuses are considered an “amount due” to the employee only if, at the time of separation, the compensation has been earned and not modified in accordance with a written policy. Importantly, this law provides that such compensation is only due if it is earned at the time of separation. Additionally, the employer can lawfully establish a written policy that (1) provides for adjustments to the amount due to the employee based on changes to the order generating the commission; (2) provides that a payment is not earned unless and until the employer has received the payment which generates the commission, incentive pay, or bonus.

This law can be best explained by way of example. If Bob the software salesperson had finalized the sale of a piece of software, his employer had a policy allowing 30 days for the customer to make the payment on that sale, and Bob was terminated on day 20 before the customer paid for the software, then Bob arguably would not be entitled to the commission, if his employer had a written policy providing that no commission is earned until after it has received the payment.

Under this new law, employers should ensure that their written commission, incentive pay, and bonus policies are carefully reviewed. For those employers who do not have a written policy regarding these forms of compensation, such written policies should be prepared as soon as possible to ensure that employers are protected under this new law.

Louisiana Legislature Updates How to Handle Commissions, Incentive Pay, and Bonuses

Effective August 1, 2024, the Louisiana Legislature has changed the rules for determining what compensation is “due” to an employee at the time of that employee’s termination, giving employers the right to clarify by written policy when commissions, incentive pay, and bonuses are due. Now more than ever, employers must ensure that they have clearly drafted written policies regarding how commissions, incentive pay, and bonuses are earned and paid to employees.

Under Louisiana law, employees must be paid all amounts due by either the next regular payday or 15 days after the date of termination, whichever occurs first. The new law provides that commissions, incentive pay, and bonuses are considered an “amount due” to the employee only if, at the time of separation, the compensation has been earned and not modified in accordance with a written policy. Importantly, this law provides that such compensation is only due if it is earned at the time of separation. Additionally, the employer can lawfully establish a written policy that (1) provides for adjustments to the amount due to the employee based on changes to the order generating the commission; (2) provides that a payment is not earned unless and until the employer has received the payment which generates the commission, incentive pay, or bonus.

This law can be best explained by way of example. If Bob the software salesperson had finalized the sale of a piece of software, his employer had a policy allowing 30 days for the customer to make the payment on that sale, and Bob was terminated on day 20 before the customer paid for the software, then Bob arguably would not be entitled to the commission, if his employer had a written policy providing that no commission is earned until after it has received the payment.

Under this new law, employers should ensure that their written commission, incentive pay, and bonus policies are carefully reviewed. For those employers who do not have a written policy regarding these forms of compensation, such written policies should be prepared as soon as possible to ensure that employers are protected under this new law.

Louisiana Legislature Updates How to Handle Commissions, Incentive Pay, and Bonuses

Effective August 1, 2024, the Louisiana Legislature has changed the rules for determining what compensation is “due” to an employee at the time of that employee’s termination, giving employers the right to clarify by written policy when commissions, incentive pay, and bonuses are due. Now more than ever, employers must ensure that they have clearly drafted written policies regarding how commissions, incentive pay, and bonuses are earned and paid to employees.

Under Louisiana law, employees must be paid all amounts due by either the next regular payday or 15 days after the date of termination, whichever occurs first. The new law provides that commissions, incentive pay, and bonuses are considered an “amount due” to the employee only if, at the time of separation, the compensation has been earned and not modified in accordance with a written policy. Importantly, this law provides that such compensation is only due if it is earned at the time of separation. Additionally, the employer can lawfully establish a written policy that (1) provides for adjustments to the amount due to the employee based on changes to the order generating the commission; (2) provides that a payment is not earned unless and until the employer has received the payment which generates the commission, incentive pay, or bonus.

This law can be best explained by way of example. If Bob the software salesperson had finalized the sale of a piece of software, his employer had a policy allowing 30 days for the customer to make the payment on that sale, and Bob was terminated on day 20 before the customer paid for the software, then Bob arguably would not be entitled to the commission, if his employer had a written policy providing that no commission is earned until after it has received the payment.

Under this new law, employers should ensure that their written commission, incentive pay, and bonus policies are carefully reviewed. For those employers who do not have a written policy regarding these forms of compensation, such written policies should be prepared as soon as possible to ensure that employers are protected under this new law.