Communicating sales incentive plans in California
On October 7, 2011, California enacted a new law, AB 1396, requiring all employers to provide a written description of their sales incentive plans to employees who receive commissions or other sales incentives as part of a compensation package for services rendered in California. The description must explain how and when commissions or other sales incentives will be calculated and paid.
This requirement applies to all employers who do business in California, whether they are based in California or out of state. In addition, each employee who receives commissions or other sales incentives must sign and return the description by the end of 2012.
In addition to meeting state requirements, the descriptions can be an opportunity to educate your employees about what they need to do to earn sales incentives. By clarifying sales incentive requirements, you can simultaneously motivate your sales staff to be more productive.
We can help you effectively design and communicate your sales incentive compensation plans and have developed some resources to help you as you consider your approach to meeting these requirements: