California Sales Agreement Requirements

Effective January 1, 2013 employers in California are required to satisfy new regulations associated with Sales Commission Agreements. To be in compliance, employers need to issue agreements with their commission sales representatives that meet the following provisions.

 

Sales Commission Provisions Due to California Law AB 1836

•        Employee must be given a signed copy.

•         Employer must obtain a signed receipt from employee.

•        Clear description of manner of calculating commissions.

•         If based on revenue, is it amount invoiced or amount collected?

•         If based on “profit” on a sale, how is the amount of profit determined; i.e., what charges will be applied against revenue to determine profit?

•        Agreement should define when commission is earned:

ü  Upon “booking” of sale

ü  Upon delivery of product

ü  Upon receipt of payment

•         Agreement should state that only those commissions that have been earned by date of termination will be paid

•        Chargebacks must be in contract if they will be taken.

•         Chargebacks may only be for returns or cancellations relating to sales made by the employee.

•        Agreement should explain how draws will be applied to commissions:

ü   Will draws be forgiven if not met?

ü   Will draws be carried forward?

 

•        Meal and rest break requirements, where applicable (inside salespeople are not exempt from meal and rest break law).

•         Employment at will language.

•         Reference to employee handbook or employer policies.

 Submitted by Michael Salisbury from HRA www.hralliance.biz