• When a Handshake Just Won't Do: New Law Requires Written Agreement for Commissioned Salespersons
  • May 7, 2009 | Author: Shari J. Fagen
  • Law Firm: Robinson Brog Leinwand Greene Genovese & Gluck P.C. - New York Office
  • New York recently amended the Labor Law in connection with commissioned salespersons. The amendment to New York's Labor Law makes written agreements a necessity rather than an option for commissioned salespersons. Effective October 16, 2007, all employers of commission salespersons must put in writing the terms of employment of all salespersons. The document must be signed by both the employer and the salesperson. The terms to be put into writing include:

    1. how wages, salary, commissions, draws, etc are calculated
    2. when commissions are earned and when they are payable
    3. how and how often draws are reconciled, and
    4. what will be payable in the event of termination

    The agreement must be kept by the employer for at least three (3) years and are subject to inspection by the Commissioner of Labor. Employers who do not have written agreements with commission salespersons, or fail to retain the agreements for inspection, will be presumed to have agreed to the terms of employment presented by the commission salesperson. This presumption may be detrimental to an employer whose commission sales employees bring wage claims against the employer.

    New York law continues to require that all monies earned or payable must be paid to the commission salesperson at least once a month, and not later than the last day of the month following the month in which they are earned, unless the monthly or more frequently paid monies are substantial, in which case additional compensation, such as incentive earnings and bonuses, may be paid less frequently. The law further requires that employers must supply a commission salesperson, upon written request, with a statement of earnings paid or due and unpaid.

    Below is the complete text of section 191.1 (c) of the Labor Law, with the new language in bold:

    c. Commission salespersons.--A commission salesperson shall be paid the wages, salary, drawing account, commissions and all other monies earned or payable in accordance with the agreed terms of employment, but not less frequently than once in each month and not later than the last day of the month following the month in which they are earned; provided, however, that if monthly or more frequent payment of wages, salary, drawing accounts or commissions are substantial, then additional compensation earned, including but not limited to extra or incentive earnings, bonuses and special payments, may be paid less frequently than once in each month, but in no event later than the time provided in the employment agreement or compensation plan. The employer shall furnish a commission salesperson, upon written request, a statement of earnings paid or due and unpaid. The agreed terms of employment shall be reduced to writing, signed by both the employer and the commission salesperson, kept on file by the employer for a period not less than three years and made available to the commissioner upon request. Such writing shall include a description of how wages, salary, drawing account, commissions and all other monies earned and payable shall be calculated. Where the writing provides for a recoverable draw, the frequency of reconciliation shall be included. Such writing shall also provide details pertinent to payment of wages, salary, drawing account, commissions and all other monies earned and payable in the case of termination of employment by either party. The failure of an employer to produce such written terms of employment, upon request of the commissioner, shall give rise to a presumption that the terms of employment that the commissioned salesperson has presented are the agreed terms of employment.