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A California federal judge has brought an end to the Shopify Sales Workers Commission Suit, closing the door on allegations that the e-commerce giant violated California labor laws by misclassifying employees and imposing an unlawful commission structure.

U.S. District Judge Haywood S. Gilliam Jr. on Thursday approved the joint request from plaintiff Matthew Lazares and Shopify Inc. to dismiss the case. Lazares’ claims were dismissed with prejudice—meaning they cannot be refiled—while claims by similarly situated workers were dismissed without prejudice, leaving the door open for potential future action. Each side agreed to cover its own attorney fees and costs.

Allegations of Misclassification and Illegal Commission Plans

Lazares originally filed his case in California state court before Shopify moved it to federal court in October. At the heart of the dispute were accusations that Shopify improperly classified its sales employees as overtime-exempt, denying them fair compensation for long workweeks.

He alleged that Shopify sales staff were paid a base salary plus commissions, but the classification did not hold up under the law:

• Workers spent less than 50% of their time outside their home offices, disqualifying them as “outside sales employees.”

• They also failed to meet the criteria for the “inside salesperson” exemption.

As a result, Lazares claimed they were entitled to overtime pay when exceeding 40 hours a week.

Commission Terms Called a “Direct Violation”

The lawsuit also attacked Shopify’s commission plan as legally defective. Lazares argued the company unilaterally revised commission terms without drafting new written agreements, effectively nullifying the old plan without replacing it—something California law forbids.

He further accused Shopify of:

• Applying new commission terms that were less favorable to workers after old plans expired.

• Forcing sales employees to waive wage claims as a condition of participation.

• Denying workers meal and rest breaks required under state law.

• Failing to track sick time properly, instead paying employees only their base rate when they were ill.

Settlement Brings Case to a Quiet Close

While Shopify has not commented, Daniel Valles of Valles Law PC, counsel for Lazares, confirmed that the matter had been resolved to the “mutual satisfaction of the parties.”

Shopify was represented by Joseph Rose of Gibson Dunn & Crutcher LLP, while Lazares was represented by Valles and Kayla M. Rathjen of Valles Law PC.

The dismissal marks the official conclusion of a case that spotlighted labor practices in the high-stakes world of tech-driven sales. But with claims by other employees dismissed without prejudice, Shopify may not be entirely free from future legal challenges.