Articles

Client Alert - New York Now Requires Written Agreements with Commission Salespeople

By Peter Porcino

Apr. 28, 2008

The New York State Legislature has amended the State Labor Law to require written agreements for salespersons paid on a commission basis. The Department of Labor had been frustrated by its inability to investigate wage payment claims for commissions in the absence of a written agreement detailing the terms of payment.

To comply with the amendments to the law, every employer must have a written agreement setting forth the terms of employment for its commission salespersons. The document should be signed by both the employer and the salesperson. If the employer fails to produce a written agreement upon the request of the New York State Department of Labor in a wage claim investigation, the terms asserted by the commissioned salesperson will be “presumed” to be the agreed terms. The provision requires that written agreements with commission salespersons be retained by the employer for at least three years.

The written agreement must include the following terms:

•  A description of how wages, salary, drawing account commissions and all other monies earned and payable will be calculated (we recommend the terms include any deductions, charges or chargebacks for which the salesperson will be responsible);
  
• If a draw will be recoverable, the frequency of reconciliation; and
  
• All details regarding what the salesperson will be entitled to receive in the event of a termination of the employment relationship by either party.

As an important reminder, the general rule in New York is that unless there is an agreement to the contrary, all employees in New York are employees at-will, and may be terminated at any time by the employer. When you have your counsel draw up your agreement with your salespeople, be sure to include language that emphasizes that the document does not give the salesperson a right to continued employment.

If you need any assistance with this or any other employment matters, please contact Peter R. Porcino, Simon Gerson, Robert J. Giordanella, Ronald W. Meister or Morton L. Price.

Back to top