COMMISSION / SALES COMPENSATION AGREEMENT
TABLE OF CONTENTS
- Parties and Effective Date
- Position and Territory
- Commission Structure
- Base Salary and Commission Split
- Definition of Compensable Sale
- Payment Timing
- Draw Against Commission
- Clawback and Chargeback Provisions
- Post-Termination Commission Rights
- Expense Reimbursement
- Quota and Minimum Performance
- Territory and Account Protection
- Non-Compete Reference
- Dispute Resolution
- Termination Provisions
- Colorado-Specific Legal Notes
- General Provisions
- Signatures
1. PARTIES AND EFFECTIVE DATE
Employer / Principal: [________________________________] ("Company")
Address: [________________________________]
State of Organization: Colorado
Employee / Sales Representative: [________________________________] ("Employee")
Address: [________________________________]
Effective Date: [__/__/____]
This Commission / Sales Compensation Agreement ("Agreement") is entered into by and between the Company and Employee as of the Effective Date set forth above.
2. POSITION AND TERRITORY
Job Title: [________________________________]
Reporting To: [________________________________]
Assigned Territory / Region: [________________________________]
Assigned Accounts / Verticals: [________________________________]
Employment Status:
- ☐ Full-Time Employee
- ☐ Part-Time Employee
3. COMMISSION STRUCTURE
The Employee shall be compensated under the following commission structure:
Option A — Percentage-Based Commission
| Product / Service Category | Commission Rate | Notes |
|---|---|---|
| [________________________________] | [____]% | [________________________________] |
| [________________________________] | [____]% | [________________________________] |
| [________________________________] | [____]% | [________________________________] |
Option B — Tiered Commission
| Revenue Tier | Commission Rate |
|---|---|
| $0 – $[________________________________] | [____]% |
| $[________________________________] – $[________________________________] | [____]% |
| $[________________________________] and above | [____]% |
Option C — Flat Fee Per Sale
| Transaction Type | Flat Commission Amount |
|---|---|
| [________________________________] | $[________________________________] |
| [________________________________] | $[________________________________] |
Selected Structure: ☐ Option A ☐ Option B ☐ Option C
4. BASE SALARY AND COMMISSION SPLIT
Base Salary: $[________________________________] per [☐ year / ☐ month / ☐ pay period]
Compensation Model:
- ☐ Commission Only (no base salary)
- ☐ Base Salary + Commission
- ☐ Base Salary + Commission + Bonus
Target Total Compensation (estimated): $[________________________________] per year
Pay Period for Base Salary: ☐ Weekly ☐ Bi-Weekly ☐ Semi-Monthly ☐ Monthly
5. DEFINITION OF COMPENSABLE SALE
A "Sale" or "Closed Deal" for purposes of commission calculation is defined as:
[________________________________]
A commission is deemed earned when:
- ☐ The customer executes a binding purchase order or contract
- ☐ The customer makes full payment
- ☐ The product or service is delivered and accepted
- ☐ Other: [________________________________]
Excluded from commission calculation:
- ☐ Returns, cancellations, or chargebacks within [____] days
- ☐ Internal or employee sales
- ☐ Sales below $[________________________________]
- ☐ Other: [________________________________]
6. PAYMENT TIMING
Commission Payment Schedule:
- ☐ Monthly, on or before the [____] day of the following month
- ☐ Semi-monthly, in accordance with regular payroll
- ☐ Other: [________________________________]
Commission Statements: The Company shall provide the Employee with a written commission statement on each commission payment date detailing the basis for the commission calculation.
7. DRAW AGAINST COMMISSION
Draw Applicable: ☐ Yes ☐ No
If Yes:
Draw Amount: $[________________________________] per [________________________________]
Draw Type:
- ☐ Recoverable Draw (advance against future commissions)
- ☐ Non-Recoverable Draw (guaranteed minimum)
Repayment Terms (Recoverable Draw):
[________________________________]
8. CLAWBACK AND CHARGEBACK PROVISIONS
Clawback Applicable: ☐ Yes ☐ No
Clawback Period: [____] days from date of commission payment
Triggering Events:
- ☐ Customer cancellation within [____] days of sale
- ☐ Customer non-payment or default
- ☐ Return of product within [____] days
- ☐ Other: [________________________________]
Chargeback Calculation Method:
[________________________________]
9. POST-TERMINATION COMMISSION RIGHTS
Commissions Earned Before Termination:
All commissions that have been earned and determinable (as defined in Section 5) but not yet paid as of the date of termination shall be paid immediately upon termination, per C.R.S. § 8-4-104.
Commissions on Pending Sales:
- ☐ Employee is entitled to commissions on deals substantially procured by Employee but closed within [____] days after termination
- ☐ Employee forfeits commissions on deals not closed before the termination date
- ☐ Pro-rated commission on deals in progress at termination
- ☐ Other: [________________________________]
10. EXPENSE REIMBURSEMENT
The Company shall reimburse Employee for the following pre-approved business expenses:
- ☐ Mileage at the IRS standard rate
- ☐ Client entertainment (pre-approved)
- ☐ Travel expenses
- ☐ Cell phone / internet
- ☐ Other: [________________________________]
Reimbursement Procedure: Expenses must be submitted within [____] days with receipts via [________________________________].
11. QUOTA AND MINIMUM PERFORMANCE
Sales Quota: $[________________________________] per [☐ month / ☐ quarter / ☐ year]
Quota Review Period: [________________________________]
Consequences of Failing to Meet Quota:
- ☐ Performance improvement plan
- ☐ Reduction in territory
- ☐ Adjustment to commission rate (prospective only)
- ☐ Termination of employment
- ☐ Other: [________________________________]
12. TERRITORY AND ACCOUNT PROTECTION
Exclusive Territory: ☐ Yes ☐ No
If Yes, the Company shall not assign another salesperson to Employee's designated territory during the term of this Agreement, except:
[________________________________]
Account Ownership Rules:
[________________________________]
Split Commission Policy (if applicable):
[________________________________]
13. NON-COMPETE REFERENCE
☐ A separate Non-Compete / Non-Solicitation Agreement is attached or incorporated by reference.
☐ A separate Confidentiality and Proprietary Information Agreement is attached or incorporated by reference.
14. DISPUTE RESOLUTION
Governing Law: This Agreement shall be governed by the laws of the State of Colorado.
Venue: [________________________________] County, Colorado
Dispute Resolution Method:
- ☐ Litigation in state or federal court
- ☐ Binding Arbitration under [________________________________] rules
- ☐ Mediation followed by Arbitration
15. TERMINATION PROVISIONS
Employment Relationship: Employment is at-will unless otherwise stated in a separate written agreement.
Notice of Termination:
- ☐ At-will; no notice required by either party
- ☐ [____] days' written notice required by either party
Upon Termination:
1. All earned commissions shall be paid per Section 9
2. Company property must be returned within [____] days
3. Outstanding draw balances handled per Section 7
Modification of Commission Plan:
The Company reserves the right to modify this commission plan with [____] days' written notice. Changes apply prospectively only and do not affect commissions already earned.
16. COLORADO-SPECIFIC LEGAL NOTES
Commissions as Wages: C.R.S. § 8-4-101 explicitly defines commissions as "wages" or "compensation," granting them full statutory protection under the Colorado Wage Claim Act.
Immediate Payment on Termination: C.R.S. § 8-4-104 requires earned, vested, and determinable wages (including commissions) to be paid immediately upon termination.
No "Present to Win" Clauses: Colorado has invalidated clauses requiring employment at the time of payment as a condition for receiving earned and determinable commissions or bonuses.
Procuring Cause Doctrine: In the absence of an agreement, the general rule is that an employee whose efforts were the "procuring cause" of a sale is entitled to the commission.
Penalties for Late Payment: C.R.S. § 8-4-109 provides penalties of the greater of unpaid wages or 125% of the employee's daily rate for each day of non-payment, up to 90 days, plus attorney's fees.
Non-Compete Restrictions: C.R.S. § 8-2-113 severely limits non-compete agreements; compensation thresholds apply.
At-Will Employment: Colorado is an at-will employment state.
17. GENERAL PROVISIONS
Entire Agreement: This Agreement constitutes the entire agreement between the parties concerning commission compensation and supersedes all prior agreements on this subject.
Severability: If any provision is found invalid or unenforceable, the remaining provisions shall continue in full force and effect.
Amendment: This Agreement may only be amended in writing signed by both parties.
Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original.
18. SIGNATURES
By signing below, both parties acknowledge they have read, understand, and agree to the terms of this Agreement.
EMPLOYER
Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]
EMPLOYEE
Signature: [________________________________]
Printed Name: [________________________________]
Date: [__/__/____]
SOURCES AND REFERENCES
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