Commissioned Employees

Do you have employees that earn all or part of their income on a commission basis? If you do, you need to make sure you are in compliance with Section 191 of the New York State Labor Law. Section 191 was amended in October 2007 to provide that employers must have a written agreement outlining the terms of a commissioned salesperson’s employment.

The agreement should clearly lay out the formula for calculating commissions, when commissions are payable, if there are any offsets, and how the commissioned employee will be paid commissions on termination. In the event that there is no written agreement in place, the presumption will be that the terms an employee presents are the correct terms.

Notwithstanding this amendment to the Labor Law, clearly defining an employee’s compensation in writing is a sound business practice. If there is ever a dispute, you, as an employer, will have documentation to support your position. The written agreements should be maintained with an employee’s files and the law requires them to be maintained for a period of three years.

If you are in need of assistance in preparing a commission or employment agreement or would like an attorney to review an existing agreement to ensure compliance, please contact either Jennifer L. Chadwick, Esq. at 585-324-5721, or Matthew A. Ryen, Esq. at 585-324-5701.