Contractor License Practice Exam

Is a commission paid to a salesperson required to be withheld if the salesperson leaves a company?

1. Yes

2. No

3. Only under certain conditions

4. It depends on the contract

The correct answer is: Yes

A commission paid to a salesperson is generally not required to be withheld if the salesperson leaves a company. The reason the correct answer states "No" is that, typically, commissions earned prior to the departure should be paid out, as compensation for work already completed. The way commissions are structured can vary widely depending on company policy, industry standards, and specific agreements made with the salesperson. Some contracts may include terms that dictate the conditions under which commissions are paid out. This may involve stipulations regarding minimum performance levels, but it is not a universal requirement to withhold payment just because a salesperson has left the company. Thus, the correct understanding is that while it may be appropriate or necessary to withhold commissions in certain cases, such as specific contractual provisions or if commissions had not yet been earned, there is no blanket rule requiring that commissions be withheld upon a salesperson's departure.