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New Law Requires Contracts for Employees Paid by Commission in California

California Assembly Bill 1396, which was approved in October 2011 and is effective January 1, 2013, made two changes to the California Labor Code.

All California and non-California employers who pay their California employees by commission, either wholly or in part, must have a signed written employment agreement that sets forth how the commissions will be computed and paid. If the employment agreement expires, the terms of the agreement will remain in force until the contract is superseded or employment is terminated by either party.

Another change is that employers found to be in violation of the above requirements will no longer be liable for triple damages in civil court.

Employers who pay their employees by commission should ensure they have current employment agreements in place that meet the above requirements. If you have any questions regarding compliance with this new law, please contact Vogt, Resnick & Sherak.