Starting January 1, 2013, any California employee who is paid, in whole or part, by commission must have a written contract that clearly sets forth the terms and conditions of the commission structure.

Although Governor Brown signed AB 1396 into law in 2011, its requirements begin less than a month from now. Employers must create the contract, have the employee agree to and sign it, and maintain a copy. Importantly, even after the contract expires, its terms will remain in place unless the employee and employer create another agreement that supersedes it or until the employment relationship ends.

If you have commissioned employees working in California, you must have the contracts in place before this year ends. Employers who already have written commission plans in place should have the plans reviewed for wage and hour compliance.