Commission / Sales Compensation Agreement - Indiana

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. Clawback 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. Indiana-Specific Legal Notes
17. General Provisions
18. Signatures

1. PARTIES AND EFFECTIVE DATE

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

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

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

The selected model must satisfy applicable wage and hour requirements; checking "Commission Only" does not decide whether an employee is exempt from them.

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

Pay Period for Base Salary: ☐ Weekly ☐ Bi-Weekly ☐ Semi-Monthly ☐ Monthly (only if permitted by applicable wage-payment law)

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 (only if permitted by applicable wage-payment law)
• ☐ 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):
[________________________________]

This section does not authorize a deduction from earned wages. Any repayment through payroll requires a separate basis permitted by current Indiana wage-deduction law, including IC § 22-2-6-2(a) when the arrangement is a wage assignment.

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:
[________________________________]

A chargeback may adjust a commission only under the selected earning terms and applicable law. This agreement does not itself authorize taking an already earned or paid amount from payroll; any wage deduction needs a separate lawful basis.

9. POST-TERMINATION COMMISSION RIGHTS

Worker and transaction classification (select before use):

• ☐ Employee compensation. Under IC § 22-2-9-2(a), unpaid wages or compensation become due on the regular payday for the pay period in which separation occurred, subject to that subsection's railroad exception. A voluntarily departing employee's amount due is payable on the next usual and regular payday under IC § 22-2-5-1(b). IC § 22-2-5-2 supplies remedies for a failure to pay as section 1 requires; it does not create a ten-day-after-earning deadline.
• ☐ Covered wholesale sales-representative contract. If IC § 24-4-7 applies, the principal must pay accrued commissions within fourteen (14) days after payment would have been due under the contract had it not terminated. Confirm that the Company is a statutory “principal,” the representative solicits wholesale product orders in Indiana, and the compensation fits the statutory percentage-based definition; a flat fee alone does not meet that definition.
• ☐ Other classification. State the controlling payment rule and supporting authority: [________________________________].

Commissions Earned or Accrued Before Termination:
All commissions earned or accrued under the selected rule and Section 5 shall be paid by the legally required deadline. The payment schedule below may accelerate that deadline but may not delay or waive it.

Selected post-termination payment date or formula: [________________________________]

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: [________________________________]

Do not select a forfeiture or chargeback term that conflicts with commissions already earned or accrued under the controlling wage or wholesale-representative rule.

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 Indiana.

Venue: [________________________________] County, Indiana

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. INDIANA-SPECIFIC LEGAL NOTES

Commissions as Wages: Define clearly when commissions are earned and payable. Once earned as wages, pay them under the applicable Indiana wage-payment schedule and separation rules.

Pay-Period Timing: IC § 22-2-5-1(a) requires a covered employer doing business in Indiana to pay at least semimonthly or biweekly if the employee requests it. Subsection (b) requires wages earned through a date no more than ten business days before payment; §§ 22-2-5-1.1 and -3 exempt specified workers.

Wholesale Sales Representative Protections: For a covered wholesale sales-representative contract, IC § 24-4-7-5(a) requires the principal to pay accrued commissions within fourteen (14) days after payment would have been due under the contract had it continued. The deadline runs from the contractual due date, rather than from termination itself.

Remedies for Non-Payment: Under IC § 22-2-5-2, a court hearing a qualifying Wage Payment Statute suit orders the unpaid amount and reasonable plaintiff attorney fees and costs. It orders liquidated damages equal to two times the wages due if it finds the employer was not acting in good faith. Those remedies require the statutory and factual predicates; they are not an automatic payroll calculation.

Employee-Requested Pay Frequency: A covered employee may request at least semimonthly or biweekly payment under IC § 22-2-5-1(a); confirm the statutory exemptions before treating that schedule as mandatory.

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

• Current Indiana Code, Title 22 — Wage Payment and Final Pay
• IC § 22-2-9-2 — Separated-Employee Wage Timing
• IC § 24-4-7-5 — Wholesale Sales Representatives
• Indiana Department of Labor — Wage and Hour