Closer Commission Agreement: What to Check Before You Sign

By Lane Wright, 2026-11-09

Before you sign a closer commission agreement, check five things: whether the promised OTE is believable for the company's size, when a commission counts as earned, when it is actually paid, what happens to it when a client refunds or disputes a charge, and what happens to it if you leave. Then check whether you are a contractor or an employee, because that decides which protections you have. This checklist walks through each term in plain words, with the questions to ask before you sign.

One note before we start: this is a rep's checklist, not legal advice. For anything binding, especially a non compete or a large clawback, have a lawyer in your state read the agreement.

What is a closer commission agreement?

A closer commission agreement is the written deal between you and the offer owner that says what you earn per sale, when you have earned it, when you get paid, and what can take it back. In high ticket sales it is usually short, often a page or two, and most closers sign it as independent contractors.

That shortness is the problem. A one page agreement that says "10 percent of every sale" leaves out the parts that decide what you actually take home: refunds, payment plans, chargebacks, late payouts and what happens on your last day. Commission software companies that write these agreements for a living list the same gaps. Xactly's template guide, for example, says a good agreement spells out clawback triggers, how long a deal is considered at risk, whether commission is earned on signature or only once cash is collected, and how disputes get raised [20].

Commission is usually about 10 percent for closers and about 5 percent for setters. The rate is rarely where reps get burned. The terms around the rate are.

What should you check before you even read the contract?

Check the OTE against reality first. OTE, on target earnings, is what the company says you will make if you hit target, and it is the first thing I look for in any offer. I think anyone honestly looks for the OTE first. The problem is that a lot of business owners lie about it.

Every offer says you will make 5, 10, 15 or 20K a month. Only a few people in any of those companies really do. So before you spend time on clawback clauses, find out whether the number at the top of the offer is even possible. Anything that brings you closer to the truth, or closer to the lie, so you don't waste your time with that company, is valuable.

OTE is a target, not a promise. Paychex defines it as total pay at 100 percent of target and says plainly that it is not guaranteed: the variable part is earned through performance [23]. In salaried software sales, where OTE is common, the Bridge Group's benchmark of more than 170 companies found a median account executive OTE of $190K with a base to variable split of about 53 to 47 [24]. Most high ticket closer roles are 100 percent variable, which makes the OTE claim easier to inflate and harder to check.

How do you sanity check a high ticket OTE?

Ask four questions, in this order. These are the questions I tell new reps to ask before they sign anything, and I have walked reps through them before.

1. Do you have other closers right now, and what are they making? If the company has reps, they have real numbers. If nobody is near the OTE in the offer, you won't be either.
2. What is the company's monthly revenue? If revenue is 50K a month and they promise you a 20K OTE, that does not add up. At 10 percent commission, a 20K month means you personally closed 200K in sales, four times what the whole company brings in.
3. How do you get clients now? Organic content, paid ads, cold email? Cold traffic is a very different beast to sell than organic traffic. A buyer who has watched the founder's videos for six months arrives warm. A buyer who clicked an ad yesterday does not.
4. How long has the business been running? A company in its third month has no track record of paying reps on time, because it has no track record of anything.

You will not always get straight answers. That is an answer too. If the owner won't tell you what their current closers make, or the numbers they give can't produce the OTE they are advertising, you have learned what you needed before signing. Our guide to red flags in high ticket closer jobs covers the warning signs that point to a scam outright.

When is a commission earned, and when is it paid?

Earned and paid are two different moments, and your agreement should name both. A commission is earned when the conditions in the agreement are met, for example when the client signs, or when their payment clears. It is paid on the schedule the agreement sets, for example within a week of the deal or once a month.

Texas puts the first part simply in its rule for employees: a commission is earned when the employee has met all the required conditions [16]. Xactly's guide notes that some companies count a deal at signature while finance may only count it when cash is collected [20]. In high ticket, "cash collected" is the usual rule, which matters a lot once payment plans enter the picture.

My view on timing is simple: the best payout is right after the deal is paid. The longer the gap between the client paying and you getting paid, the more things can happen in between, and some offer owners are shady with payouts.

Questions to ask:

1. Is commission earned on the signed agreement, on the first payment, or on cash actually collected?
2. How many days after the client pays do I get paid?
3. Is payout per deal, weekly or monthly?
4. What happens if a payout date lands after I have left?

What happens to my commission if I leave or get let go before payday?

Ask this before you sign, because some agreements say you lose it. I ran into one: every payout came at the end of the month, and if you got fired or let go before then, you lost that sale's commission entirely. I wasn't fired, but I still pushed back. I asked the owner, "Hey man, what's with this? Why is that?" Someone still did the work. The sale still closed. The client still paid.

State law for employees often agrees with that instinct. New York's Department of Labor says earned commissions must be paid to the salesperson even if the employment relationship has ended [15]. Texas says that unless the agreement says otherwise, commissions are paid after separation once they are earned [16]. Xactly's template guide lists "tail" commissions, pay on deals that close or pay out after you leave, as a term a good agreement should address [20].

Two cautions. First, those state rules protect employees; if you are a genuine contractor, your agreement is mostly what you have, which is why the wording matters. Second, a "you lose it if you leave" clause doesn't always mean the owner is planning to cheat you. Sometimes it was copied from a template. Asking about it costs you nothing and tells you a lot about how the owner thinks about the people who close for them.

How do clawbacks work when a client refunds?

A clawback takes back commission you were already paid when the sale it came from refunds or cancels. Most high ticket agreements have one, and the questions that matter are how long a sale stays at risk and how much comes back.

CaptivateIQ, which builds commission software, suggests clawback windows of 30 to 90 days for short term products and 6 to 12 months for subscriptions, and says clawbacks should apply only to the commission tied to the lost deal, never to base pay [21]. That is vendor guidance, not law, but it is a useful yardstick. A clawback with no time limit means any refund, at any point, comes out of your next check.

Here is what I think is fair, and it is one option, not a standard. It needs a conversation with the rep, because the reason behind the refund matters. If a rep clearly closed someone who had no reason to stay, pushed them hard emotionally into a big payment, that refund is on the rep.

Part of a closer's job is keeping a new client from refunding, close to the close. A rep can't do much a month or more after the sale, but in the first few weeks they should help the client settle in so they never want to refund. So my fair rule is: if the client refunds within the first month after the close, take half the commission back. On a $10,000 sale at 10 percent, that is a $1,000 commission, so $500 comes off. After that first month, the rep keeps what they are owed.

The reasoning is that it is the rep's job to make sure the client does not have buyer's remorse. Remorse usually comes from a client who was pushed into the decision emotionally and doesn't really believe the program can get them where they want to go. If you sell that way, a clawback is fair. If you sold honestly and the client churned three months later for reasons nobody on the call controlled, taking your full commission back is not.

Questions to ask:

1. How long after the sale can a commission be clawed back?
2. Is it the full commission or part of it?
3. Does a clawback apply to refunds, cancellations, chargebacks, or all three?
4. Is it taken from future commissions or billed to me?

What about chargebacks and payment disputes?

A chargeback is a client disputing the charge with their card company instead of asking for a refund, and the window for it is much longer than most closers assume. Stripe's documentation says card networks typically allow cardholders to start a dispute within 120 days of the original payment, and some payment methods allow up to 180 days [17]. For services paid in advance, which describes most coaching and consulting offers, Stripe notes that the window can start on the date the service was meant to be delivered, not the payment date [17]. A full dispute can take two to three months to resolve [17].

Separately, federal law gives cardholders a right to dispute billing errors; the FTC says the written dispute must reach the card issuer within 60 days after the first bill with the error [18].

What that means for your agreement: if chargebacks trigger a clawback, a sale you closed in January could come back in May. Ask whether chargebacks are treated like refunds, and whether there is any cut off date after which your commission is final.

How are payment plans and recurring clients paid?

On a payment plan, you are usually paid your percentage of each installment as it is collected, not the full commission up front. If a client pays $2,000 a month for five months, you get 10 percent of each $2,000 as it arrives, and if they stop paying in month three, you stop earning in month three. Xactly calls this the payout tail: paying on cash collected spreads your commission over the life of the deal [22].

Recurring revenue deals work the same way for longer. The client pays monthly and you get a percentage every month they stay, for example 10 percent of a $5,000 a month client. As a premise these are good. I liked them as a new rep, because one good close keeps paying.

But recurring deals only work if you can see the money. Ask for access to the company's revenue dashboard so you can see exactly what comes in on your clients. I have been stiffed before on payouts, and so have other reps I know. Not every payment the company makes has to be visible to you, just enough to confirm that all your cash collected is accounted for.

Questions to ask:

1. On a payment plan, am I paid per installment or up front?
2. If the client misses a payment, what happens to the commission already paid?
3. On recurring clients, how long do I keep earning: as long as they stay, or a set number of months?
4. Will I have read access to the dashboard that shows payments on my deals?

What is a draw against commission?

A draw is an advance on future commission, paid on a schedule so you have income while your pipeline builds. There are two kinds. A recoverable draw is money the company expects to get back out of your later commissions. A nonrecoverable draw is money it does not expect to get back [25].

Draws are rarer in high ticket than in salaried sales, but they show up, especially for new reps. If your agreement includes one, three details matter:

1. Recoverable or not. If recoverable, how often is it reconciled against commissions? New York requires an employer to put that reconciliation schedule in the written agreement for commissioned employees [14].
2. What happens if you leave owing money. New York's labor department says a draw cannot be clawed back unless the agreement allows it in writing [15]. A federal appeals court case reported by SHRM, Stein v. HHGregg, found that a policy making departing employees repay unearned draws was enough to claim a federal wage law violation [19]. Those protections are for employees, but they show how courts view a draw that turns into a debt.
3. Whether the draw is really a base. A nonrecoverable draw that never gets reconciled is a base salary under another name. Good, but name it what it is.

Are you a 1099 contractor or an employee?

Most high ticket closers are paid as independent contractors on a Form 1099, but the label in your agreement does not decide your status. The IRS looks at the whole relationship, grouping its evidence into behavioral control, financial control and the type of relationship [1]. The Department of Labor says directly that a worker who receives a 1099 is not necessarily an independent contractor [6].

The rules are moving. Since May 1, 2025, Labor Department investigators have used older guidance instead of the 2024 contractor rule when they enforce the law, while that rule still applies in private lawsuits [7]. In February 2026 the department proposed a new test built around control and the worker's chance for profit or loss, and the proposal says a relationship's actual practices count more than what the contract says is possible [8]. As of this writing, the department's page shows no final rule.

Why it matters to you:

1. Protections. Misclassified employees can lose minimum wage and overtime they are entitled to [5]. The written commission rules in California, New York and Texas cover employees [13][14][16].
2. Control. If the company sets your hours, your script word for word, your call quota and your tools, and you work only for them, ask how that squares with contractor status.
3. Remote work does not change much. Federal rules for "outside sales" exclude sales made by phone or over the internet [9], so a closer on video calls isn't in that category even if they are an employee.

If you are unsure, the IRS and the Labor Department pages in the sources below are the place to start, and a state labor office or employment lawyer is the place to finish.

What do the tax numbers mean for a 1099 closer?

As a contractor, nobody withholds tax from your commission, and you pay both halves of Social Security and Medicare yourself. The IRS sets the self employment tax rate at 15.3 percent (12.4 percent for Social Security and 2.9 percent for Medicare), owed once your net self employment earnings reach $400 in a year [4].

You will usually get a Form 1099-NEC, the form for nonemployee compensation [2]. For payments made in 2026, the IRS says the reporting threshold rose to $2,000 [3]. Whether or not you get the form, the income is taxable.

Two practical points for comparing offers. A 1099 OTE and a salaried OTE of the same size are not the same money, because of that 15.3 percent and because you pay for your own tools, software and benefits. And because nothing is withheld from your payouts, set money aside from every commission check rather than at the end of the year.

Can a high ticket closer contract include a non compete?

Yes, it can include one, and whether it holds up depends on your state. There is no federal ban. The FTC's 2024 rule banning most non competes was set aside by a court in August 2024, the FTC voted 3 to 1 in September 2025 to drop its appeal, and the FTC's own page now says the rule is not in effect and not enforceable [10][11].

State law still matters a lot. California, for example, voids most non compete agreements in an employment context [12]. Other states allow them within limits.

For a closer, a non solicit clause is often the bigger issue than a non compete. A non solicit stops you from working with the company's clients or recruiting its reps after you leave. Read for:

1. How long it lasts after you leave.
2. Whether it covers similar offers, or any offer in the niche.
3. Whether it applies to leads you brought in yourself.

How do you check that your commissions are paid correctly?

Ask for records before you need them. The safest agreement gives you a way to see the payments on your deals and a set way to raise a dispute.

Three things to get in writing:

1. Read access to payments on your deals. A revenue dashboard view, a shared report, or a monthly statement listing each client, each payment and your commission on it.
2. A statement on request. New York's labor department says a commissioned salesperson can request a statement of earnings in writing, and that if the employer can't produce the written agreement, the department presumes the salesperson's version of the terms is correct [15]. That is an employee rule, but it is a good model: records protect both sides.
3. A dispute process with a deadline. Xactly's guide lists a clear window and process for raising disputes as a standard part of an agreement [20]. Know how many days you have to flag a missing payout, and who you flag it to.

Keep your own log too: client name, close date, amount, payment plan, and each payout you receive. It takes two minutes per deal and it ends most arguments before they start.

What terms should you question before you sign?

Bring this list to the call with the owner. None of it is a deal breaker on its own. Each one is a question worth an answer.

1. An OTE that the company's revenue or current reps can't support.
2. No written definition of when commission is earned.
3. Payouts only at month end, with commission lost if you leave before the date.
4. A clawback with no time limit, or one that takes the full commission for any refund at any point.
5. Chargebacks that can claw back a commission months after the sale with no cut off.
6. Payment plan commission where you don't know what happens on a missed installment.
7. A recoverable draw with no reconciliation schedule, or one you owe back if you leave.
8. Contractor status alongside employee style control over your hours, script and tools.
9. A non solicit that would block you from leads you generated yourself.
10. No access to records that show payments on your own deals.
11. A clause that lets the company review, cap or delay unusually large commissions. Ask what triggers it and who decides, because it only matters on the deal you most want paid.

How do you bring up contract terms without losing the seat?

Ask the way you would ask a prospect a hard question: directly, calmly, and with a reason. You are not accusing the owner of anything. You are making sure both of you mean the same thing by the same words.

A few lines that work:

1. "Before I sign, I want to make sure I understand how a refund in month two would work for my commission."
2. "I see payouts are at month end. If I closed a deal on the 10th and wasn't here on the 30th, what happens to that commission?"
3. "Can I see what your current closers made last month? I want to know the OTE is realistic for me, not just possible."
4. "Would I have read access to the payments on my clients, so I can match my payouts?"

An owner who runs a good business will usually answer these without trouble, because good reps ask them. If the questions alone make the seat disappear, you found that out before you spent a month closing for them.

Once you do sign, the agreement is only worth what you close under it. The faster you get sharp on the new offer, the sooner the OTE question answers itself. You can run the offer against Sarah and Mike in live roleplay before your first real call, so you are learning the objections on practice buyers instead of the company's leads.

Sources

1. Internal Revenue Service: Independent contractor (self employed) or employee?
2. Internal Revenue Service: About Form 1099-NEC, Nonemployee Compensation
3. Internal Revenue Service: Am I required to file a Form 1099 or other information return?
4. Internal Revenue Service: Self employment tax (Social Security and Medicare taxes)
5. U.S. Department of Labor: Misclassification of Employees as Independent Contractors Under the Fair Labor Standards Act
6. U.S. Department of Labor: Fact Sheet 13: Employee or Independent Contractor Classification Under the FLSA
7. U.S. Department of Labor: Field Assistance Bulletin No. 2025-1
8. U.S. Department of Labor: Notice of Proposed Rulemaking on Employee or Independent Contractor Status
9. U.S. Department of Labor: Fact Sheet 17F: Exemption for Outside Sales Employees Under the FLSA
10. Federal Trade Commission: Noncompete Rule
11. Federal Trade Commission: Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule
12. FindLaw (California Business and Professions Code): Section 16600
13. FindLaw (California Labor Code): Section 2751
14. New York State Senate: Labor Law Section 191, Frequency of payments
15. New York State Department of Labor: Payment of Commissions Frequently Asked Questions
16. Cornell Legal Information Institute: 40 Texas Administrative Code Section 821.26, Commissions or Bonuses
17. Stripe: How disputes work
18. Federal Trade Commission Consumer Advice: Using Credit Cards and Disputing Charges
19. SHRM: Policy Requiring Recovery of Draw Payments from Terminated Employees Violates FLSA
20. Xactly: Sales Commission Agreement: What to Include
21. CaptivateIQ: Navigating Clawbacks for Sales Commission
22. Xactly: How to Build Sales Compensation Plans for Recurring Revenue
23. Paychex: What Is OTE? Employer Guide to On Target Earnings
24. The Bridge Group: 2024 SaaS AE Metrics and Compensation Benchmark Report
25. Patriot Software: What Is a Draw Against Commission?