Ohio's Labor Law on Sales and Commissions

Most sales professionals are paid by commission, a fee, such as a percentage, that's earned from making a sale. Commission is often paid in lieu of a hourly wage or salary, making most sales professionals independent contractors. Whether your sales commissions are protected by Ohio law depends on a number of factors.

The Fair Labor Standards Act (FLSA) is a federal labor law that creates a national minimum wage and sets overtime requirements for most United States employers. The FLSA does not cover commissions earned from sales, even if the sales were part of your employment, since they are considered additional compensation. The FLSA only governs minimum wages and required overtime. In other words, there is no recourse under the FLSA to collect commissions owed to you by an employer or client. However, there is some recourse through state law.

Ohio law defines commission as "compensation accruing to a person for payment by another person, the rate of which is expressed as a percentage of the dollar amount of orders, sales or profits." Since commissions are not classified as wages in Ohio, and most salespersons are considered independent contractors rather than employees, they fall outside of Ohio wage and labor laws. Therefore, to recover commissions earned but not yet paid to you, you must pursue recovery through Ohio contract law.

Under Ohio law, commissions are due based on the terms of the contract. If no contract exists, commissions are due based on past business practices among the parties or based on the customary practice in the related sales field. Additionally, if the contract between the parties is terminated early, any and all unpaid commissions must be paid within 30 days of the termination, and any commissions that accrue after the termination must be paid within 13 days under Ohio law.

If your previous employer or client fails to pay commissions owed to you in accordance with Ohio law, you can bring a civil lawsuit against them to collect your commission in court. Ohio law also allows you to seek exemplary damages equal to three times the amount you were originally owed if your former employer or client willfully withheld the payment or otherwise acted in bad faith. You can also collect court and attorney fees if you are successful.