On July 18, 2007, the New York State Legislature enacted legislation that amends the New York Labor Law (“Labor Law”) to require, among other things, that the terms of employment for “commission salespersons”1 be set forth in writing and also to expand the scope of employees who are covered by certain protections of the Labor Law.

As part of this legislation, effective October 16, 2007, the terms of employment for a commission salesperson must be set forth in a written agreement signed by both the employer and the commission salesperson. The agreement must include “a description of how wages, salary, drawing account, commissions and all other monies earned and payable shall be calculated,” and details regarding payment of these amounts upon termination of employment. If a recoverable draw, i.e., an advance of money to the commission salesperson to be paid back through future earnings, is provided for in the parties’ agreement, the frequency of reconciliation must also be set forth in the agreement. The legislation states that such agreements must be retained by employers for at least three years—the legislation does not specify, however, whether employers must retain such agreements for three years from the dates of the agreements, the dates of the employees’ terminations or some other dates. Any failure by the employer to produce the agreement at the request of the New York State Commissioner of Labor will create a presumption that the commission salesperson’s representation of the terms of his or her agreement regarding commissions is accurate.

In addition, effective January 14, 2008, this legislation will expand the scope of employees covered by certain protections of the Labor Law as follows:

  • The definition of “clerical and other worker” contained in the Labor Law currently excludes bona fide executive, administrative and professional employees earning in excess of US$600 per week. As a result of the legislation, “clerical and other worker” will now exclude only bona fide executive, administrative and professional employees earning in excess of US$900 per week. Pursuant to Section 191 of the Labor Law, “clerical and other worker[s]” must be paid their wages no less frequently than semi-monthly on regular pay days designated in advance by the employer. The change to the definition of “clerical and other worker” will mean that employees earning US$900 or less per week must now be paid their wages on at least a semi-monthly basis (whereas employees earning between US$601 and US$900 per week are currently permitted to be paid less frequently than semimonthly).

Bona fide executive, administrative and professional employees earning more than US$900 per week may continue to be paid less frequently than semi-monthly.

  • In order to provide for direct deposit of an employee’s wages, Section 192 of the Labor Law requires the employer to obtain advance written consent from the employee. Currently, however, bona fide executive, administrative and professional employees earning more than US$600 per week may be subject to direct deposit even without their consent. As a result of the legislation, Section 192 will be changed to provide that only bona fide executive, administrative and professional employees earning in excess of US$900 per week may be subject to mandatory direct deposit of their wages.
  • For employers who provide “benefits or wage supplements”2 to their employees, Section 198-C of the Labor Law provides that such employers will be guilty of misdemeanors for failing, neglecting or refusing to pay these benefits or wage supplements within 30 days after the dates such payments become due. If these employers are corporations, their Presidents, Secretaries or Treasurers, or those officers exercising corresponding functions, will each be guilty of a misdemeanor. Section 198-C does not apply, however, to bona fide executive, administrative and professional employees earning more than US$600 per week. As a result of the legislation, Section 198-C will be changed to provide that it does not apply to bona fide executive, administrative and professional employees earning in excess of US$900 per week.