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