In the course of a forensic analysis of a luxury dealership's commission plan, I identified a structural exposure that the supervising partner — a senior wage-and-hour practitioner with decades of experience — noted he had never seen raised in his practice.
The pattern is simple and industry-wide. A car salesperson closes a deal: negotiates the price, gets the customer's signatures, and hands off to the F&I department. The commission plan says the salesperson earns the commission when the deal 'funds' — which happens when the financing is finalized, typically one to three weeks after closing. If the salesperson leaves the dealership between closing and funding, most commission plans forfeit the pending commission.
Sciborski v. Pacific Bell Directory (2012) 205 Cal.App.4th 1152 is usually cited too broadly here, in both directions. It holds that a commission is earned when the contractual conditions precedent are met, and it expressly permits conditioning on the sale becoming final — the opinion's own example is 'no returns within a specified time or final payment received.' A funding condition standing alone is therefore permitted, not unlawful. What Sciborski forbids is a deduction 'based on conditions that are unrelated to the sale and/or that merely reflect the employer's attempt to shift the cost of doing business to an employee.' That is the vulnerable seam: a forfeiture triggered by the salesperson's departure is a condition about the employee rather than about the sale, and no published California decision has tested it. The argument, properly framed, is that the salesperson's work is complete at closing, and that a departure trigger takes back an earned commission for a reason unrelated to the sale — an untested theory, but one the opinion's own logic invites.
The exposure is not limited to the unpaid commission. Each forfeited commission generates derivative claims: section 203 waiting time penalties (up to 30 days of the employee's daily wages), section 226 wage statement violations (for failing to report earned but unpaid commissions), and interest under section 218.6. For a dealership with 20% annual salesperson turnover and an average of two pending deals per departed salesperson, the aggregate exposure compounds rapidly.
The practical implication is immediate. Every California dealership should audit its commission plan for forfeiture-on-departure provisions, trace departed salespeople's pending deals to determine whether commissions were forfeited, and revise the commission plan to eliminate the forfeiture trigger. The compliance fix is straightforward — pay commissions on funded deals to departed salespeople just as you would to current employees. The cost of compliance is a fraction of the litigation exposure.