New California Labor Law Requires Employee Commission Plan In Writing

The National Automatic Merchandising Association (NAMA) recently reported that employers in California who are paying employees, including route drivers, any type of commission (fully or partially) must present employees with a signed and written commission plan and agreement.

New Labor Code 2751 requires all employers doing business in California to draft written agreements that involve commissions as a component of the employees’ compensation. Pursuant to this new law, the written contracts must include the following: (1) the method for calculating the commission; and (2) the method for paying the commission.  It is important for an employer to be as detailed as possible, while still maintaining some flexibility. This new law requires an employer to specify all components of the commission (i.e., any costs or adjusted amounts in determining the final amount). 

Operators must provide a signed copy of the contract to every employee covered by the commission agreement or plan, and must also receive and retain a signed receipt from the employee that the employee received and agreed to the commission agreement or plan.  The operator must also sign the document.

The law went into affect Jan. 1, 2013. A violation of the new labor code will result in a statutory penalty of $100 for each aggrieved employee per pay period for the initial violation and $200 for each aggrieved employee per pay period for each subsequent violation.

For more information, NAMA members can contact Heather Baily, a NAMA Knowledge Source Partner, for one free 15 minute consultation, per member, per quarter. Phone: 312-894-3266. Email: