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The California Court of Appeal held in Koehl v. Verio, Inc., 142 Cal. App. 4th 1313 (Cal. App. 1st Dist. 2006) that it was “clearly the law” in California that a salesperson must pay back the excess of advances made over commissions earned when there is an express agreement on the part of the salesperson to do so.

The California Court of Appeal found that California Labor Code § 224 provides an independent basis to allow charge backs in certain situations.  Even if advance payments were considered “wages,” an employer may withhold or divert them if the deduction is: 1) authorized in writing and 2) does not reduce the employee’s “standard wage.”