California loan officers have the right to their commissions

It is a common practice in the financial services industry to pay loan officers a commission.

Commissions are legal in California in most cases, but they are subject to some parameters:

  • Commissions are supposed to be a percentage of a product or service an employee sells. Commissions on loans are acceptable.
  • If an employer elects to use commission to pay all or part of an employee’s wages, they still must follow the state’s wage and overtime laws. In other words, commissions cannot be a way for a business to get around paying minimum wages.
  • An employer and employee should spell out their commission arrangement in a contract. The contract should state when an employee earns commissions. For example, the agreement may specify that a loan officer earns their commission after a loan gets finalized and the borrower makes a down payment. The terms of when commissions are earned must be fundamentally fair.
  • Once an employee earns their commission, a business owes it to them just like any other wages. If they do not pay according to the law, the employee may seek compensation over and above the wages the business owes them.

If a loan officer working in the greater San Diego area believes that their employer has underpaid their commissions, then they may have legal options available to them.

Loan officers should be aware of their other employee rights as well

As employees in this state, loan officers have a full range of rights provided to them under both California and federal law. They should remember this, especially in difficult or tense situations with their employers.

For example, the push to earn revenue can sometimes lead to financial businesses cutting legal and ethical corners when it comes to lending money.

Loan officers who see concerning behavior at their workplaces, whether from management or colleagues, have protection if they choose to go to the proper authorities with their concerns.