Labor & Employment Law Articles 

NEW RECORD KEEPING REQUIREMENTS FOR

COMMISSIONED SALESPERSONS IN NEW YORK STATE

Effective October 18, 2007, the New York State Labor Law has been amended requiring employers who employ commissioned salespersons to have signed written agreements with all of their commissioned salespersons.  Such agreements must contain:

1) A description how wages, salary, commissions, draw against commissions, and other monies earned, are calculated and become payable;

2) Where a recoverable draw is provided, the frequency of reconciliation;

3) A description how wages, salary, commissions, draw against commissions, and other monies earned, are payable upon termination of employment by the employer and/or employee; and

4) Signatures by both the employer and the commissioned salespersons.

The employer is required to keep such agreements on file for three years and to provide them to the New York State Department of Labor upon request.  In the event the employer fails to maintain such agreements, if a wage dispute is brought by an employee before the New York State Department of Labor or before a court of law, it will be presumed that the terms of the wages, salary, and/or commissions claimed by the employee were the agreed upon terms of employment. In such instance, the employer would then have the burden of proof in showing that the terms alleged by the employee were incorrect.

This new law applies to all persons whose principal activity is the selling of any goods, wares, merchandise, services, real estate, securities, insurance, etc.  The law does not make any exclusions upon the nature of the goods sold.  This new law also applies to all commissioned salespersons who receive earning in whole or in part by commissions.  Thus, even if employees earn most of their compensation by salary, an agreement is still necessary if they earn any compensation by commissions.  However, this law does not apply to employees whose principal activity is of a supervisory, managerial, executive or administrative nature who may earn commissions in part.  Thus, store or department managers whose primary job duty is to supervise employees, and who do not regularly make commissioned sales, are not bound by these requirements.

Accordingly, we recommend that all employers employing commissioned salespersons create such agreements.  Such agreements should be given to all current commissioned salespersons, to be signed, and such agreements should be kept on file with the company's Human Resources Manager.  Additionally, all new hires should be made to sign such agreements prior to starting work for the company.  If there is any change to the company's commission structure and/or terms, new agreements should be issued to all employees for re-signature.