In California, what is the difference between a “Commission” and a “Bonus?”

In California, a commission and a bonus are two different types of  compensation that employers may use to incentivize and reward their  employees, and they have different legal implications. 

A commission is a form of compensation that is based on a percentage of the  sales or revenue that an employee generates. For example, a salesperson  might receive a commission equal to 5% of the value of the sales they make.  Commissions are typically calculated on a per-sale basis and can be earned in  addition to a base salary or hourly wage. In California, commissions are  governed by specific state laws that require employers to provide written  agreements outlining the terms of the commission, including the formula or  method for calculating the commission and the timing and frequency of  payments. 

A bonus, on the other hand, is a form of compensation that is typically given  to employees as a lump-sum payment, either as a reward for good  performance, as an incentive to achieve certain goals, or as a share of the  profits earned by the company. Unlike commissions, bonuses are not tied to  specific sales or revenue targets and can be awarded at the employer’s  discretion. In California, employers are not required by law to provide  bonuses, but if they do, they must ensure that the bonuses are paid in  accordance with the terms of any agreement or policy that governs the bonus  program. 

Overall, the key difference between a commission and a bonus is that  commissions are earned as a result of specific sales or revenue generated by  the employee, while bonuses are typically awarded as a result of overall  performance or other factors decided by the employer.