Friday, October 26, 2012

A New California Law Affecting Commissioned Employees

Labor Code section 2751 has been on the books for several years.  Historically, it required out-of-state companies to document, in writing, the commission structure for employees.  The court invalidated the provision because it treated out-of-state companies differently than California employers, and therefore was a violation of the Interstate Commerce Clause. 

Section 2751 has been amended to apply to all employers, including California employers.  It goes into effect on January 1, 2013.  According to this provision, the contract providing commissions must be in writing and must set forth the method by which the commissions are computed and paid.  (Labor Code section 2751(a).)  In addition, the employer must give a signed copy of the contract to every employee who is paid the commission.  The employer must also obtain a signed receipt for the contract from each employee.  (Labor Code section 2751(b).)  Thus, the commissions should be:  (1) in writing; (2) signed by employer; (3) setting forth the computation of wages; and (4) acknowledged by the employee in a receipt. 

Employers should also be aware that AB 469 went into effect last January (2012).  It requires employers to provide a "Notice" to all employees with certain information.  Here's a link to the Department of Industrial Relations that has the Notice for employers. 

Employers can probably comply with the two laws by providing commissioned employees with a Notice and an attached wage agreement setting forth the commission structure.  If you need help, email me. 

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