This Commission Agreement provides a starting point for drafting commission agreements for sales personnel. It is intended for private employers hiring on an at-will basis.

It is based on federal law and does not address all potential state law distinctions; thus, you should check any relevant state and local laws.

When drafting a commission agreement, you should pay particular attention to specifying when the employee earns the commission and at what point an employee's right to receive a commission ends.

What does this Commission Agreement provide?

• The ability for you to clearly set out the terms and conditions of commission payment, customised to your business needs;

• The ability to customise your commission payment structure;

• Information regarding applicable durations, deadlines or end events; and

• Procedures regarding termination and dispute resolution.

Other names for Commission Agreement include:

• Commission Contract
• Sales Commission Agreement
• Free Commission Agreement

Must the agreement be in writing?

In California, commission agreements must be in writing and the writing must reflect at least the method by which employers will compute and pay commissions.

The employer must give the employee a signed copy of the agreement and the employer must obtain a signed receipt from each commissioned employee acknowledging that the employee received a signed copy of the agreement.

What happens if the agreement expires?

If the contract expires and the employee continues working for the employer, the terms of the expired contract are presumed to remain in effect. See Cal. Lab. Code § 2751.