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Employee Commission Agreements Must Be In Writing Starting January 2013

A new law governing employees who work on commissions takes effect January 1, 2013, requiring all commission agreements to be in writing. Such written commission contracts must describe the method by which commissions are computed and paid. Further, employers must provide a copy of the signed agreement to each commissioned employee and obtain a signed receipt from each commissioned employee.

The new law also provides that when a commission contract has a fixed time period, but the employee continues to work for commissions after the expiration of the contract, the terms of the expired contract continue to apply until the parties sign a new commission agreement.

Failure to comply may subject an employer to penalties. Thus, employers should act promptly to insure that all employees that receive all or part of their compensation by commissions have effective written commission agreements. Employers should also monitor when existing commission agreements are scheduled to expire so as to avoid the terms of such expired contracts automatically continuing to govern the commission relationship.

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This Bulletin is made available for educational purposes and to provide general information on current legal topics, not to provide specific legal advice. The publication of this Bulletin does not create any attorney client relationship, and this Bulletin should not be used as a substitute for competent legal advice from a licensed professional attorney.

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