Editor’s Note: Jeff has covered this topic for us in the past, but as he has said, it needs to be addressed again, and more thoroughly. You can read his original post here for further information.
In the United States, a “draw” (technically known as a non-recoverable draw against commission) is the most common, yet the most misunderstood way of paying a recruiter.
I’ll show you how to get back most of that draw in a minute. But first, let’s see how the draw arrangement works legally:
A draw is either a loan (temporarily given) or wages (mandatory “can’t-get-it-back” pay for work) depending on whether the recruiter (employee) is still employed at the end of the pay period (a loan) or not (wages). This “disappearing salary” feature is designed to comply with the minimum wage laws.
The recruiter is given a fixed amount of money at scheduled intervals (the pay period). Usually all payroll deductions are taken out, so it’s a net amount.