Termination and Final Pay Policy
This policy establishes the procedures for calculating and paying final sales compensation upon employee separation, including earned commissions, pipeline deal treatment, post-termination payment obligations, and clawback triggers. The policy ensures compliance with state final pay laws while protecting the Company's interests regarding outstanding obligations, recoverable draws, and post-termination deal crediting.
1Purpose & Objectives
This policy establishes the procedures for calculating and paying final sales compensation upon employee separation, including earned commissions, pipeline deal treatment, post-termination payment obligations, and clawback triggers. The policy ensures compliance with state final pay laws while protecting the Company's interests regarding outstanding obligations, recoverable draws, and post-termination deal crediting.
- •Define final commission calculation methodology for all separation types
- •Establish pipeline deal treatment rules for voluntary and involuntary terminations
- •Ensure compliance with state-specific final pay timing requirements
- •Set clear rules for post-termination commission payments on earned transactions
- •Define clawback triggers and recovery procedures specific to terminated employees
- •Provide consistent treatment across all separation scenarios
2Scope
Applies To
- •All voluntary resignations by commission-eligible employees
- •All involuntary terminations including performance-based and restructuring
- •Retirement of commission-eligible employees
- •Mutual separation agreements involving commissioned sales roles
- •Contract expiration for fixed-term sales positions
- •Death or permanent disability of commissioned employees
3Definitions
Separation Date
The last day of active employment, which determines the cutoff for commission crediting, benefit eligibility, and final pay calculation. For resigned employees, this is the last day worked; for terminated employees, the effective date of termination.
Earned Commission
Commission on transactions where all conditions precedent to payment (as defined in the commission agreement) were satisfied on or before the separation date, regardless of whether payment has been processed.
Pipeline Commission
Commission on transactions that were in the representative's active pipeline (qualified opportunity or beyond) as of the separation date but have not yet closed. Pipeline commissions may or may not be payable depending on the stage and circumstances of separation.
Post-Termination Payment
A commission payment made after the separation date for transactions that close after termination but were substantially developed by the departed representative. Subject to specific eligibility rules based on separation type.
Clawback Trigger
An event occurring before, at, or after termination that activates the Company's right to recover previously paid commissions per SCP-001, including deal cancellations, bad debt, fraud discovery, or violation of post-employment obligations.
4Key Provisions
Upon notification of employee separation, Sales Compensation initiates the final commission calculation process to ensure all earned compensation is identified, calculated, and paid within required timelines.
Calculation Scope
The final commission calculation includes all compensation elements earned through the separation date:
- •All commissions where the credit event occurred on or before the separation date
- •Pro-rated quarterly or annual bonuses based on attainment through the separation date
- •Accrued but unpaid SPIF or contest earnings through the separation date
- •Released holdback amounts where conditions were met by the separation date
- •Draw/guarantee amounts earned through the separation date (less any outstanding draw balance)
Calculation Timeline
Final commission calculations must be completed within the following timelines:
- •Standard commissions (easily calculable): Within 5 business days of separation date
- •Complex commissions (requiring data validation or customer confirmation): Within 15 business days
- •Annual bonuses or year-end true-ups: By March 15 of the following year (409A compliance)
- •Disputed amounts: Resolution timeline per SCP-015, with undisputed amounts paid on schedule
- •If state law requires earlier payment, the state deadline controls
Separation Type Impact on Calculation
The calculation methodology may vary based on the type of separation:
- •Voluntary resignation: Standard calculation; no additional amounts beyond earned commissions unless post-termination provisions apply
- •Involuntary termination (performance): Standard calculation; clawback review initiated for recent transactions
- •Involuntary termination (restructuring/RIF): Enhanced calculation; pipeline protection period applies
- •Retirement: Full calculation including any deferred amounts; pipeline protection per retirement agreement
- •Termination for cause: Standard calculation of earned amounts only; all unvested/contingent amounts forfeited; clawback review for prior 24 months
5Compliance References
Federal Laws
- •FLSA (Fair Labor Standards Act) - final pay requirements
- •IRC Section 409A - timing of post-separation payments
- •ERISA - benefit continuation requirements upon termination
State Laws
- •California Labor Code Sections 201-203 - Final pay timing and waiting time penalties
- •New York Labor Law Section 191 - Payment upon termination
- •Massachusetts Wage Act - Day of termination payment requirement
- •Illinois Wage Payment Act - Final pay timing
- •State-specific requirements for payroll deductions from final pay