A new California law creates new obligations and requirements for employers with commissioned salespeople. In this video, HR.BLR.com Legal Editor Susan Prince explains the new law, as well as what types of compensation are and are not considered "commissions."
Hi. I’m Susan Prince, a Legal Editor at HR.BLR.com. We recently received an Ask the Expert question asking for details about the new California law pertaining to commissioned salespeople.
Effective January 1, 2013, employers of commissioned salespeople in California must prepare a written document containing information on how commissions are computed and paid, under California Labor Code Section 2751.
Employers must provide a signed copy of the agreement to the employee, and obtain a signed receipt for the contract from each employee. This provides a record that the employee received the agreement.
If one of these contracts expires and the parties continue to work under the terms of the expired contract, the contract terms will remain in full force and effect until the contract is superseded or employment is terminated by either party.
The term "commissions" under this law means compensation paid to any person for services rendered in the sale of the employer’s property or services and based proportionately on the amount or value of the sale.
"Commissions" do not include short-term productivity bonuses paid to retail clerks or bonus and profit-sharing plans, unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.
Susan E. Prince, J.D., is a Legal Editor for BLR’s human resources and employment law publications. Ms. Prince has over 10 years of experience as an attorney and writer in the field of human resources and has published numerous articles on a variety of human resources and employment topics, including compensation, benefits, workers’ compensation, discrimination, work/life issues, termination, and military leave. Ms. Prince also served as an expert on several audio conferences discussing the 2004 changes to the federal regulations under the Fair Labor Standards Act. Before starting her career in publishing, Ms. Prince practiced law for several years in the insurance industry and served as president of a retail sales business. Ms. Prince received her law degree from Vermont Law School.
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