CALIFORNIA LABOR CODE–Written Commission Agreements

By January 1, 2013, every employer who pays employees for services rendered in California on a commission basis must have a written agreement with the employee which sets forth the basis on which commissions are to be paid. The employer must give a signed copy of the agreement to every employee to whom commissions are to be paid and obtain a signed acknowledgment of receipt from each such employee. For this purpose commissions do not include short-term productivity bonuses such as those given to retail clerks and will generally not include bonus or profit-sharing plans unless they are tied to a fixed percentage based on sales or profits as compensation for work performed.

What this means for you

Employers currently without written agreements with their commissioned employees should be prepared to provide these on or before January 1, 2013. Those employers with current agreements need to review them to ensure that they meet the above requirements and that they have signed acknowledgments from all employees who have received them.

If you would like assistance with updating any policies or otherwise implementing these new requirements, please contact GMK employment law attorney Jeanne Flaherty at 818-755-0444 or