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Failure to Follow New York Requirements for Commissioned Sales Employees Could Be Costly

June 30, 2009

Make sure you know the rules.

The old adage “get it in writing” is critical when it comes to commissioned sales employees. In fact, the New York Labor Law provides that you must have a detailed written agreement that is signed by both the employer and the commissioned sales employee.

How detailed must the written agreement be? At a minimum, the written agreement must include:

  • how all compensation will be earned and payable, including such items as commissions, draws, wages and salaries;
  • how frequently any draws recoverable by the employer will be reconciled; and
  • any other details about the payment of salary, wages, draws and commissions and any all other monetary items payable in the event that either party terminates the employment agreement.

In addition to these requirements, the employer must keep the written signed agreement on file for three years during which time it must be produced for the New York State Department of Labor at any time upon request.

So what happens if the employer fails to comply with these requirements?  What are the risks? The commissioned sales employee’s description of the employment terms will be presumed to be accurate! Disputes arise all the time, particularly if each party’s understanding of the deal is different because they failed to put it in a detailed writing. This is the very reason to “get it in writing.”

While this all sounds relatively simple, it is the proper drafting of the written agreement that will ensure compliance with the law. It is beneficial to work with legal counsel to avoid the risks that may await you down the road. If you have any questions, contact attorney Lisa Stidham at HoganWillig at 716-636-7600.