Opinion ID: 2959941
Heading Depth: 3
Heading Rank: 3

Heading: Deductions from Commission

Text: Hodes also maintains that, even if Pachter is covered by section 193 as an “employee,” the deductions in question would be proper because section 193 regulates deductions from wages, not the subtractions pursuant to a commission formula she experienced. The term “wages” is defined by section 190 as “the earnings of an employee for labor or services rendered, regardless of 4 We observe that if the definitions applicable to section 191 are somehow interposed on section 193, more than just executives would be excluded. For example, the definition of “clerical and other workers” excludes anyone working in any administrative or professional capacity who earns more than six hundred dollars a week. N.Y. Labor Law § 190(7). The adoption of that definition has the potential to exclude a broad array of employees from section 193 protection. 8 whether the amount of earnings is determined on a time, piece, commission or other basis.” N.Y. Labor Law § 190. Hodes argues that Pachter did not have a vested right to her commissions – in other words, they are not earned commissions – until after all agreed-to adjustments were made. When a commission becomes “earned” so that an employee has a “vested right” to these moneys usually depends on the terms of an agreement providing for the commission. Tuttle, 227 A.D.2d at 756; Gennes, 23 A.D.3d at 521. Once “earned,” it is clear that deductions other than those set forth in section 193 are improper. See Gennes, 23 A.D.3d at 521; Edlitz v. Nipkow & Kobelt, Inc., 264 A.D.2d 437, 694 N.Y.S.2d 439, 440 (2d Dep’t 1999); see also Dean Witter Reynolds v. Ross, 75 A.D.2d 373, 381, 429 N.Y.S.2d 653 (1st Dep’t 1980) (holding that employee does not acquire a vested right to payments until after adjustments or conditions have been met pursuant to the terms of the agreed-to bonus plan). In this case, no written agreement exists. However, under common law, in the absence of a written agreement, a commission is deemed to have been earned “upon sale.” See Jacobs v. Macy’s East, Inc., 262 A.D.2d 607, 608-09, 693 N.Y.S.2d 164, 166 (2d Dep’t 1999) (denying dismissal of a complaint for improper deductions under section 193 where plaintiffs alleged that no contract existed and that their commissions were therefore earned upon sale); see also Srour v. Dwelling Quest Corp., 5 N.Y.3d 874, 875 (2005) (observing that, absent an agreement to the contrary, “the common-law rule is that ‘a broker who produces a person ready and willing to enter into a contract upon his employer’s terms . . . has earned his commissions.’”) (quoting Feinberg Bros. Agency v. Berted Realty Co., 70 N.Y.2d 828, 830 (1987). This rule broadly applies to “conventional” brokerage relationships. See Lane – The Real 9 Estate Dep’t Store, Inc. v. Lawlet Corp., 28 N.Y.2d 36, 42 (1971) (“[I]t is a well-settled rule in this State that in the absence of an agreement to the contrary, a real estate broker will be deemed to have earned his commission when he produces a buyer who is ready, willing and able to purchase at the terms set by the seller.”); Wagner v. Derecktor, 306 N.Y. 386, 390 (1954); Shulman v. Lin, 99 A.D.2d 856, 857, 472 N.Y.S.2d 777, 778 (3d Dep’t 1984). This appeal presents features of a conventional brokerage relationship. Pachter arguably brokered the sale of advertising space between Hodes and its clients. Though the caselaw is somewhat ambiguous, under the common law rule, her commission could be considered “earned” either when: (1) payment is advanced by Hodes to the media company; (2) a client is presented a bill that includes Hodes’ fee; or (3) she initially secures the client’s commitment. Under any of these scenarios, the commission would have been “earned” prior to the deductions. However, neither the Court of Appeals nor the state appellate courts have definitively addressed the applicability of this common law rule to section 193 and the definition of “wages” in Article 6. This lack of guidance, coupled with obvious importance of this issue to employers and commission-based wage earners throughout New York, indicates to us that certification is appropriate. See Green v. Montgomery, 219 F.3d 52, 60 (2d Cir. 2000).