The Basics – Paying Employee Commissions

Happy New Year, and may 2012 be a year full of innovation, success, and happiness for you and your business.  With the new laws that went into effect this month, employers have been (or should be) busy reviewing and revising their employee handbooks, offer letters, and employment policies to ensure compliance with the new California laws.  Since you are knee deep in the process, I will spare you another post on the new laws that go into effect in 2012. Instead, we’ll do a Q&A on the basics of paying employees on commission.  Also, by January 2013, commission-based employment agreements for services provided in California must be in writing. 1.  Who could be paid on commission? Employees who are involved in selling a product or service; AND Commission earnings are a percentage of the price of the service or product sold; AND Employees’ sales duties must not include making the product or rendering the service. 2.  Is it o.k. for employers to deduct commissions paid from future commissions? It is permissible for an employer to have a commission policy that provides that … Continue reading

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