Employers with commissioned salespeople in New York are now required to have written agreements stating the salesperson’s compensation terms. New York Labor Code Section 191c was amended, effective October 16, 2007, to require the agreed terms of employment to be put in writing, signed by both the employer and the commissioned salesperson, and kept by the employer for not less than three years. The document must include a description of how wages, salary, drawing account, commissions and all other monies earned and payable are to be calculated. Where a recoverable draw is provided, the frequency of reconciliation must be included. The document must also provide details pertinent to the payment of wages, salary, drawing account, commissions and all other monies earned and payable in the case of termination of employment by either party. Labor Code Section 191c also addresses the frequency of payment of a commissioned salesperson, which generally is at least once a month. However, in certain circumstances, additional compensation such as commissions, incentive earnings, bonuses and special payments may be paid less frequently than once a month as specified in the employment agreement.
The agreement must be made available to the New York Commissioner of Labor upon request. The failure of an employer to produce such written terms upon the request of the Commissioner will give rise to a presumption that the terms of employment presented by the commissioned salesperson are the agreed upon terms of employment, which could be disadvantageous to the employer if the commissioned salesperson files a wage claim.
Employers with commissioned personnel in New York should review any existing agreements in light of this amendment and immediately prepare agreements if the terms of compensation have not been reduced to writing and signed by both the company and the commissioned employee.