Commission / Sales Compensation Agreement

COMMISSION / SALES COMPENSATION AGREEMENT

TABLE OF CONTENTS

1. Parties and Effective Date
2. Position and Territory
3. Commission Structure
4. Base Salary and Commission Split
5. Definition of Compensable Sale
6. Payment Timing
7. Draw Against Commission
8. Adjustment and Chargeback Provisions
9. Post-Termination Commission Rights
10. Expense Reimbursement
11. Quota and Minimum Performance
12. Territory and Account Protection
13. Non-Compete Reference
14. Dispute Resolution
15. Termination Provisions
16. Connecticut-Specific Legal Notes
17. General Provisions
18. Signatures

1. PARTIES AND EFFECTIVE DATE

Employer / Principal: [________________________________] ("Company")
Address: [________________________________]
State of Organization: Connecticut

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: [________________________________]

Regular Work Schedule: [DAYS / START AND END TIMES / EXPECTED HOURS]

Established Workweek Begins: [DAY / TIME]

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

Option B — Tiered Commission

Option C — Flat Fee Per Sale

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

Wage-and-Hour Review: ☐ Completed. A commission-only model may be used only if counsel confirms a valid exemption or payroll procedures guarantee every applicable minimum-wage and overtime obligation for every workweek.

Target Total Compensation (estimated): $[________________________________] per year

Regular Pay Period: ☐ Weekly ☐ Every two weeks ☐ Other schedule authorized by statute or a Labor Commissioner waiver: [________________________________]

5. DEFINITION OF COMPENSABLE SALE

A "Sale" or "Closed Deal" for purposes of commission calculation is defined as:

[________________________________]

A commission becomes earned when the following selected condition or combination of conditions has been satisfied:

• ☐ The customer executes a binding purchase order or contract
• ☐ The customer makes full payment
• ☐ The product or service is delivered and accepted
• ☐ Other: [________________________________]

If more than one box is selected: ☐ Every selected condition must occur ☐ Any one selected condition is sufficient.

Excluded from commission calculation:

• ☐ Returns, cancellations, or chargebacks within [____] days
• ☐ Internal or employee sales
• ☐ Sales below $[________________________________]
• ☐ Other: [________________________________]

The exclusions and earning conditions above apply prospectively. They do not authorize forfeiture or withholding of a commission after it has become earned.

6. PAYMENT TIMING

Commission Calculation and Statement Schedule:

• ☐ Monthly, on or before the [____] day of the following month
• ☐ Semi-monthly, in accordance with regular payroll
• ☐ Other: [________________________________]

Earned commissions will be included on a regular payday as soon as they are calculable and no less frequently than permitted by Conn. Gen. Stat. § 31-71b or an applicable waiver or statutory exception.

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):
[________________________________]

A recoverable draw is an advance, not permission to make an unlawful wage deduction. This Agreement alone does not authorize payroll deductions. Any offset or repayment must comply with Conn. Gen. Stat. § 31-71e, use any required Labor Commissioner-approved authorization, and preserve applicable minimum-wage and overtime payments.

8. ADJUSTMENT 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:
[________________________________]

Each selected triggering event must be incorporated into Section 5 as an earning condition or must be handled through another lawful written arrangement. If the Company pays an amount before all earning conditions are satisfied, the statement must identify that amount as an advance. No chargeback may retroactively forfeit earned wages or create an unauthorized payroll deduction.

9. POST-TERMINATION COMMISSION RIGHTS

Commissions Earned Before Termination:
All commissions earned under Section 5 but unpaid at separation shall be paid no later than the next business day following an employer discharge or by the next regular payday following resignation or layoff, as required by Conn. Gen. Stat. § 31-71c. If a commission is not yet earned at separation, the completed selection below and Section 5 determine whether and when it later becomes earned.

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: [________________________________]

No selection above forfeits a commission that became earned before separation.

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 Connecticut.

Venue: [________________________________] Judicial District, Connecticut

Dispute Resolution Method:

• ☐ Litigation in state or federal court
• ☐ Mediation under [________________________________] rules
• ☐ A separate, counsel-reviewed arbitration agreement signed by both parties

Nothing in this Agreement waives a nonwaivable wage right or remedy.

15. TERMINATION PROVISIONS

Employment Relationship: Subject to applicable law and any enforceable agreement, employment is at will unless a clear written promise signed by an authorized Company officer states otherwise.

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 only through the lawful process stated in Section 7

Modification of Commission Plan:
This commission plan may be modified only by a written amendment signed by both parties. Changes apply prospectively only and do not affect commissions already earned.

16. CONNECTICUT-SPECIFIC LEGAL NOTES

Unpaid-Wage Remedy: Under Conn. Gen. Stat. § 31-72, an employee may recover twice the full amount of unpaid wages, costs, and reasonable attorney's fees. If the employer establishes a good-faith belief that the underpayment complied with law, the statute provides for the full amount owed, costs, and reasonable attorney's fees instead of automatic double damages.

Independent Sales Representatives: Chapter 743ff is codified at Conn. Gen. Stat. §§ 42-481–42-484, not § 42-540 et seq. Section 42-481 expressly excludes an employee from its definition of “sales representative,” so its thirty-day termination rule is not the employee-payment rule for this Agreement. A nonemployee sales representative needs a separate agreement drafted for that chapter.

Commissions as Wages: Section 31-71a defines wages to include employee compensation calculated on a commission basis. The completed earning formula controls when the commission becomes earned, subject to wage law.

Deductions and Advances: Section 31-71e permits withholding or diversion of wages only through an authorized statutory path. Draw recovery and chargebacks must not be treated as blanket permission to deduct earned wages.

Pay Schedule: CGS § 31-71b generally requires weekly or every-two-week wage payment on a regular payday designated in advance. A less frequent schedule requires an applicable statutory exception or Labor Commissioner waiver.

Minimum Wage and Overtime: Commission compensation does not by itself establish an exemption. The Company must separately confirm and satisfy Conn. Gen. Stat. §§ 31-58 and 31-76c and applicable federal requirements.

Discharge Payment: CGS § 31-71c(b) requires payment of wages no later than the next business day following discharge.

Future-Effective Review: Public Act 26-12 amends § 31-72 effective January 1, 2027. Counsel must check the then-current text before using this Agreement on or after that date.

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

• Connecticut General Assembly, current Chapter 558 (wages): https://www.cga.ct.gov/current/pub/chap_558.htm
• Connecticut General Assembly, current Chapter 743ff (nonemployee sales representatives): https://www.cga.ct.gov/current/pub/chap_743ff.htm
• Connecticut General Assembly, Public Act 26-12: https://www.cga.ct.gov/2026/act/pa/pdf/2026PA-00012-R00HB-05003-PA.pdf
• Connecticut Department of Labor, Wage Payment Laws (DOL-74): https://portal.ct.gov/dol/-/media/dol/2022-new-design-system/divisions/wage-and-workplace-standards/wagepaymentlaws_update12-2023.pdf
• Connecticut Department of Labor, wage and hour guidance: https://portal.ct.gov/dol/divisions/wage-and-workplace-standards/wage-and-hour
• Connecticut Judicial Branch, Schofield v. Rafley, Inc., 222 Conn. App. 448 (2023): https://www.jud.ct.gov/legalresources/Docs/LJDocs/Misc/2023/47/CLJ11212023.pdf
• U.S. Department of Labor, commissions and the retail or service establishment overtime exemption: https://www.dol.gov/agencies/whd/fact-sheets/20-flsa-commissions-retail
• U.S. Department of Labor, regular rate and commission compensation: https://www.dol.gov/agencies/whd/fact-sheets/56a-regular-rate