In California, commission-based employment contracts are required to be in writing. Not only that, but pursuant to the California Labor Code section 2751, commission contracts can be enforced for as long as the parties to the agreement continue their relationship in accordance with its terms. If the written contract lapses by virtue of time, “the contract terms are presumed to be in full force and effect until the contract is superseded or employment is terminated by either party.” When the parties enter into a commission contract, a copy of that signed agreement must be given to the employee.
What are Commissions?
As per section 204.1 of the California Labor Code, commissions are “compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionally on the amount or value thereof.” The general rule is that commissions don’t include the following:
- Short-term productivity bonuses.
- Certain temporary variable incentive agreements.
- Bonuses and profit-sharing plans.
Employment agreements involving a salary plus a commission are subject to section 2751. If questions or issues arise involving commissions at your place of employment, contact us to consult with a skilled labor lawyer from our offices.
Contact our California Labor and Employment Lawyers today.
