MORE THAN MIDWAY THROUGH 2013: IS YOUR COMMISSION PLAN IN WRITING?
On January 1, 2013, Labor Code § 2751 took effect and mandated, among other things, that employees receiving commission as part of their regular wage must have their commission structure in writing, signed by the employer. Additional requirements under this provision of the code including disclosing how commissions will be computed and paid, as well as obtaining a signed “receipt” from the employee acknowledging the disclosure they received.
Moreover, this section of the code adopts the definition of the word “commission” as promulgated in Labor Code § 204.1 which states: “Commission wages are compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.” This means that the legislature has intended 2751 to apply broadly, to both exempt AND non-exempt employees, and irrespective of how the employer defines the word “commission” (i.e. incentive rewards, bonuses, etc.).
If you’re engaged in a sales job and have no idea how your commission is computed, or have not received the commission structure in writing, chances are that your employer is not in compliance with the law.