New California rules for commission compensation contracts — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

New California rules for commission compensation contracts

Get PDF file

by on
in Compensation and Benefits,Human Resources

A new law for 2013 requires Califor­nia employers that pay regular commissions to provide employees with a written contract detailing the formula for calculating commissions, as well as the method of payment.

Employers that fail to comply face fines of $100 per employee for first-time violators. Fines escalate to $200 per employee for subsequent violations. The fines will be collected under the Private Attorney General Act (PAGA).

Only regularly paid commissions fall under PAGA’s definition. The law specifically excludes:

  • Short-term productivity bonuses, such as those paid to retail clerks
  • Temporary incentives that increase commissions
  • Bonus or profit-sharing plans, unless they are based on a fixed percentage of sales or profits.

Leave a Comment

Previous post:

Next post: