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  1. #1
    Join Date
    Apr 2015
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    Default 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?

  2. #2
    Join Date
    Dec 2009
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    Default 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.

  3. #3
    Join Date
    Oct 2006
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    16,474

    Default Re: Draw

    Quote Quoting eerelations
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    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.

  4. #4
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    Default 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.

  5. #5
    Join Date
    Oct 2006
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    16,474

    Default 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.

  6. #6
    Join Date
    Jan 2006
    Posts
    38,867

    Default 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.

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