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California law defines commission wages as: "compensation paid to any person for services rendered in the sale of such employer's property or services and based proportionately upon the amount or value thereof."
This new law, however, explicitly states that commissions do not include: (1) profit-sharing plans, unless the amounts are a fixed percentage of sales, or profits, as compensation for work to be performed or (2) temporary short-term productivity bonuses, where employers might briefly provide an increased commission or bonus during a specific period.
Employers with California employees paid on commission would be wise to seek the advice of counsel before presenting an employee with a written commission plan or agreement. Although commission plans do not have to be complicated, they should be carefully worded and at the very least must accurately describe how the commission is calculated, when the commission is earned, and when the commission will be paid. If the employer is contemplating the need for charge backs against a commission, that too must be accurately set forth and described, and such employers must be mindful of the state and federal laws against forfeiture.
Tags: written commision agreements required
Posted In: Employment Law News
Blog Categories:Business Law Bulletin
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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.
Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.