Answer: When an employer is trying to recover the advance from a commissioned salesperson in a lawsuit filed in Pennsylvania and the employment agreement does not contain adequate language.
The Pennsylvania Supreme Court recently held in Banks Engineering Co., Inc v. Polons that use of the words “draw” or “advance” in an employment agreement created no presumption of a repayment obligation by the employee. To be reimbursed for funds paid in excess of commissions earned, the agreement must state that the employee is personally liable for such payments or that the draw or advance is to be construed as a loan to the employee to be repaid in the event commissions are inadequate to cover the funds advanced. The same holds true for loans made to employees for tools, tuition expenses, etc.
– Cynthia Dixon