What Should Be Included in a Sales Commission Agreement?

In some roles, employees receive payment in the form of commissions. Commission payments are especially common in the retail industry — for example, many employees receive additional pay whenever they make a sale. If you are employed in a role where you can earn commission, the terms of your commission payments must be outlined in a contractual agreement with your employer.

Your employer should include the following information in your commission agreement:

• Your commission structure, i.e. how much you will be paid in commission, and for what (for example, you will be paid $x or x% for every sale)
• If your payment is based fully or partially on commissions
• Documentation details which explain how you will track sales or other commission-based activities

A commission agreement could be included in other documents you receive upon being hired and may not necessarily be its own separate contract. It may also include other general employment terms, such as a non-compete or non-disclosure clause.

Do Verbal Commission Agreements Count?

An employer may discuss the terms of your commission agreement when you are interviewing for a job or after you are hired, without ever putting the terms of the contract into writing. Even without physical evidence of the agreement, it is still a contract that was agreed upon by you and your employer and is enforceable.

Although verbal commission agreements are technically viable, it can be difficult to prove their terms — or even their existence — in a claim. Witness accounts and non-official acknowledgments of the agreement (such as in email correspondence) can provide evidence of the agreement.

What Should I Do if My Employer is Not Adhering to the Terms of Our Agreement?

If you have a commission agreement with your employer that is not being followed, you may have a wage and hour violation claim. These types of agreements are contracts with your employer which establish that they will pay you under certain terms. If you have met those terms and are not being paid properly, contact, Donati Law, PLLC.