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COMMISSION AGREEMENTS

2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE HOT TOPICS

New York dealers must have separate, written commission agreements for every employee paid a commission, signed by the dealer and employee. The commission agreement must be attached to the employee’s Payday/Pay Rate Notice and retained for at least six years after the employee leaves the dealership. Having written commission agreements is not only a legal requirement but also protects the dealer in case of a wage dispute. If there is no commission agreement and an employee takes legal action, the court will presume that the employee’s version of events is true. Necessary Terms Written commission agreements must contain all employment terms and conditions including: • When a commission is “earned”. Once a commission is earned, it is legally considered wages so is subject to all laws regarding the wage payment, including the prohibitions on deductions; • How wages, salary, draw on commissions, commissions, and other amounts earned are calculated; • How often the employee will be paid. Commission salespersons must be paid at least once a month and not later than the last day of the month following the month in which wages are earned; • The frequency of reconciliation between draw and earned commissions; • Any other details pertinent to the payment of wages, salary, and commissions; • Details on all monies earned and payable when the employment ends. (Dealers must provide the statement of earnings paid or due and unpaid when an employee requests an earnings statement.)

Update Agreements The commission agreement should be updated and re-signed each time the dealership changes the pay plan or runs specials affecting an employee’s payment amount. For example, if a dealer paid a salesperson 15% commission during “sale-a-thon,” but the salesperson’s understanding was that they would be receiving 20%, having a commission agreement allows the dealer to prove the arrangement was 15%. If a commission-earning employee refuses to sign an agreement, a dealer would be within their rights to tell the employee that they cannot work at the dealership. Contact the Association for a sample Commission Agreement which dealers should tailor to their specific dealership and employees.

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