If you have employees who are paid commissions for work they perform, there is a new law you need to follow starting January 1, 2013. This new law requires the employer to have a written commission agreement with all employees who are paid commissions. The written agreement must contain the method for computing the commission, and a description of when the commission will be paid. We also suggest the agreement contain additional terms, including a description of when the commission vests, and a statement of the at will status of the employee, if applicable.
A copy of the signed agreement must be provided to the employee, and the employer must have a signed acknowledgement that the employee received a copy of the agreement. The agreement can be open ended, or state a specific term. If the agreement expires but the employee continues to work, the terms of the agreement will remain in effect until there is another written agreement or until employment ends.
An amendment to this new law that would exempt temporary incentives from the commission agreement requirements is currently on the governor’s desk.
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