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Do You Have to Repay Your Draw if You Quit

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  • 04-18-2015, 02:45 PM
    trig87
    Do You Have to Repay Your Draw if You Quit
    My question involves employment and labor law for the state of: Texas

    I started a job 5 months ago with an insurance selling firm. The offer letter says, "Full-time employee with $80,000 draw" and the employment agreement does not say that the employer can sue me for the draw and does not say that I need to pay it back. I got direct deposit and taxes were deducted from it. Since I left, The employer says that it wants to sue me for the draw. I was not 1099. do i need to pay?
  • 04-18-2015, 04:34 PM
    eerelations
    Re: Draw
    Generally, the term "draw" means that you are advanced pay in anticipation of sales, and that if you don't make enough sales to meet the advanced pay, you are required to pay back the balance of the draw. Because that's what the term "draw" generally means, your former employer was probably correct in thinking that it shouldn't have to spell it out in the employment agreement. However, it would probably be wise to have a local attorney review the employment agreement to help you see what you might be up against should your former employer actually sue you for the balance.
  • 04-19-2015, 04:04 AM
    llworking
    Re: Draw
    Quote:

    Quoting eerelations
    View Post
    Generally, the term "draw" means that you are advanced pay in anticipation of sales, and that if you don't make enough sales to meet the advanced pay, you are required to pay back the balance of the draw. Because that's what the term "draw" generally means, your former employer was probably correct in thinking that it shouldn't have to spell it out in the employment agreement. However, it would probably be wise to have a local attorney review the employment agreement to help you see what you might be up against should your former employer actually sue you for the balance.

    I agree with the general assessment of a draw. However, in this instance he is clearly an employee. Therefore he cannot sue him or even have a contract that says he has to pay back the entire draw. It would violate labor laws to not at least pay an employee minimum wage and overtime when applicable.

    Then, of course there is also the issue of what sales he made during the 5 month period that would have resulted in commission or eventual commission.

    I do agree that it would be wise to run the contract by an attorney who specializes in employment issues.
  • 04-19-2015, 05:36 AM
    eerelations
    Re: Draw
    I forgot to mention minimum wage and OT pay requirements plus commission (well I did remember but it was after I'd gone to bed). However, if the draw exceeds that, the employer may go after the excess balance, depending on what the agreement actually says.
  • 04-19-2015, 05:46 AM
    llworking
    Re: Draw
    Quote:

    Quoting eerelations
    View Post
    I forgot to mention minimum wage and OT pay requirements plus commission (well I did remember but it was after I'd gone to bed). However, if the draw exceeds that, the employer may go after the excess balance, depending on what the agreement actually says.

    What I find interesting is the draw amount being 80k. That is high for a draw. It makes me wonder.
  • 04-19-2015, 09:04 AM
    jk
    Re: Draw
    on top of all the other questions, was this $80k already paid in full and I presume it was an annual number. Any amount of draw paid for a period beyond the period worked is clearly recoverable by the employer. If the $80k is annual and it had been paid in full, since the OP worked only 5 months, 7/12 of the $80k ($46.7k) is owed to the employer without question.
  • 04-19-2015, 10:00 AM
    Mr. Knowitall
    Re: Draw
    Depending upon the amount of his earned commissions, it's conceivable that he would have earned considerably more or considerably less than a percentage of his draw based upon the number of months worked.
  • 04-19-2015, 10:09 AM
    jk
    Re: Draw
    Quote:

    Quoting Mr. Knowitall
    View Post
    Depending upon the amount of his earned commissions, it's conceivable that he would have earned considerably more or considerably less than a percentage of his draw based upon the number of months worked.

    but depending on how the employment contract was structured, it may be irrelevant since he did remain employed only 5 months.

    so, with that, I will withdraw the "without question" statement but leave the possibility that he may very well owe 7/12's of the draw to the employer, depending on the specifics of the employment contract.
  • 04-19-2015, 10:59 AM
    trig87
    Re: Draw
    They paid me the draw every month and I am leaving because I did not earn any commission. It is too hard. agreement doesn't say anything about overtime or minimum wage.
  • 04-19-2015, 11:25 AM
    eerelations
    Re: Draw
    Quote:

    Quoting trig87
    View Post
    They paid me the draw every month and I am leaving because I did not earn any commission. It is too hard. agreement doesn't say anything about overtime or minimum wage.

    It doesn't have to. The law says you must be paid at least minimum wage for every hour you work and OT pay for every hour over 40 that you work in any given week.

    Regarding being sued for the draw, you really really really need to run this agreement by an attorney.
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