| Upper Saddle River, NJ - - The New York | | | | A considerable amount of effort is required in |
| Department of Labor recently passed an | | | | order to achieve these goals, meet various |
| amendment to the Labor Law relative to sales | | | | government regulations, and, at the same time, |
| personnel. Effective October 16, 2007, employers | | | | be simple enough to communicate to the affected |
| are required to provide written terms of | | | | salespersons, and be within the company's ability |
| employment for commissioned salespeople or risk | | | | to administer the pay program. Unfortunately, |
| adverse impact of decisions rendered in any wage | | | | many companies are not able to balance these |
| action brought against the employer. In the | | | | different demands, and therefore their plans do |
| absence of a written document setting forth the | | | | not deliver the desired business results. In an |
| terms of employment of commissioned | | | | attempt to remedy this less than satisfactory |
| salespeople, the Department of Labor will rule in | | | | situation, these sales compensation plans |
| favor of the terms alleged by the salesperson | | | | continually need to be revised. This builds distrust |
| bringing forth the complaint. It is expected that | | | | among the sales staff, and can be a significant |
| this could have a potentially sizable negative | | | | de-motivator, leaving the door open for mistakes |
| financial impact on a company. | | | | and possibly illegal activities to occur. |
| Under the terms of this legislation, the following | | | | It is unfortunate that New York State felt that it |
| information must be included in the written | | | | was necessary to enact this legislation, but it |
| documentation: | | | | apparently is a direct result of action to correct |
| 1. Method of calculation of wages, salary, | | | | problems caused by companies that did not |
| commissions, draws against commissions and any | | | | provide the basic information to their |
| other moneys earned; | | | | salespersons. This amendment to the Labor Law |
| 2. When a commission payment is considered | | | | will have serious implications for employers in New |
| "earned"; | | | | York, and should serve as a wake-up call to all |
| 3. When a commission payment will be made to | | | | employers, everywhere. Don't wait for complaints |
| the salesperson; | | | | filed by salespeople, legal challenges to pay |
| 4. How often a recoverable draw will be | | | | practices, or the adoption of new regulations -- |
| reconciled; | | | | now is the time to review your sales |
| 5. What commissions will be payable in the event | | | | compensation programs to ensure that they |
| of termination, and when they will be paid. | | | | meet the following standards: |
| The goal behind any compensation program, but | | | | A. They are properly documented |
| especially sales compensation programs, should be | | | | B. They are monitored to make sure they are |
| to drive the desired type of performance, and | | | | achieving the desired objectives, and do not cause |
| ultimately achieve four (4) key objectives, which | | | | any unintended problems |
| can be summed up by the acronym "FARM" | | | | C. They provide a financial Win-Win situation for |
| Focus attention on desired activities; | | | | both the employee and the company |
| Attract the qualified applicants; | | | | D. The communications of sales activity and |
| Retain the experienced and highest performing | | | | earnings is accurate and reported timely |
| personnel; and | | | | E. |
| Motivate them top perform at their maximum. | | | | |