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Can an employer hold a paycheck while they are being audited

An employee works in sales and his compensation plan is a mix between commission and salary.The majority of his income comes in the form of commissions. He has been informed that the employer is undergoing an audit in relation to commissions and that due to this his commission check may be withheld until the audit is finished. There has been no timeline for this. Every year he receives a comp plan and signs off on this. This shows his goals and what he will be paid out when these goals are achieved. Can the employer legally hold his check with no notice of when distribution will occur because they are auditing the department?

Check with the Department of Labor in your state. In many states, earned commissions are considered wages and employees must be paid them, on payday. In a few other states, if the amount of the commission is in question, the employer can wait until that dispute is resolved, before paying it. However, the employer usually must pay the undisputed amount on time.

It is odd that a commission audit should take so long. Normally in this computer age, a business audit can be completed in a few days, so anything beyond a week seems excessive.

It also would not be a best practice in the HR field to hold a particular employees check, unless errors had already been found in the commission payments for that particular employee. In some states (California) even if the employer discovered an error on commissions paid in the past, the employer might not be entitled to deduct them from the current paycheck.

Because there is a signed contract in the form of a compensation plan, there is also the possiblity that the employee could seek representation by a lawyer and sue for breach of contract.

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This entry was posted on Thursday, August 21st, 2008 at 9:10 am and is filed under
Compensation, Human Resources Management.
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One Response to “Can an employer hold a paycheck while they are being audited”

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