This post is part of a new series that specifically discusses employment law issues for startups and small businesses operating in New York State and New York City.
Since 2017, New York State has required all employers of commissioned salespersons to prepare a “writing” which contains, at a minimum, the following terms:
- A description of how wages, salary, drawing accounts, commissions, and all other monies earned and payable are to be calculated;
- How often the employee will be paid;
- The frequency of reconciliation between the employee’s draw and earned commissions (where the writing provides for a recoverable draw); and
- Any other details relating to the payment of wages, salary, drawing accounts, commissions and all other monies earned and payable when the employment relationship ends.
The “writing” must be signed by both the employer and the salesperson, and the employer must keep a record of the signed, written document for at least three years. In the absence of such a signed writing, the New York Department of Labor will presume that the commission salesperson’s – not the employer’s – version of the terms of employment is correct.
The New York Department of Labor has published a set of FAQs (full text available here), in which it addresses the following questions:
- When is a commission considered to be “earned?”
- What, if any, deductions may an employer take from a commission salesperson’s commission?
- Do any commissions have to be paid to a commission salesperson who has been terminated or left employment?
- What is a draw against commissions?
- May a commission salesperson be required to repay an employer for draws against commission?
- Are commission salespersons subject to the State Minimum Wage and Overtime requirements?
- What is the difference between an “outside salesperson” and a “commission salesperson”?
- Do commission salespersons have to be paid overtime?
- What is the difference between a commission and a bonus?
- How long must employers keep a commission salesperson’s employment agreement?
- If the employment agreement is not made available, then the Department must presume that the commission salesperson’s version of the agreed terms of employment is correct.
- Are sales representatives who are independent contractors protected by the Labor Law?
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