Written Contracts Required for California Commissioned Employees Starting in 2013

Our California governor, Jerry Brown, has been busy signing into law a number of bills lately.

This latest one, AB 1396, is important to any California employer who employs commissioned salespeople.

Starting January 1, 2013, any California employee earning a commission must have a written contract that clearly spells out the terms and conditions of the commissions.

No doubt this new law was designed in part to help cut down the amount of litigation involved over commission disputes. Hopefully, this will help clarify exactly what was to be earned and by whom.

At any rate, employers must create the contract, have the salesperson sign it, and keep a copy. And here’s a catch: Even if the contract expires, it will remain in force unless you create another to replace it, or the employee leaves.

So, starting January 1, 2013, have those contracts signed and filed away, and keep them current and updated. Failure to do so could cost you $100 per occurrence, which is defined as each pay period you go without a contract.

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