Commission / Sales Compensation Agreement - Minnesota

COMMISSION / SALES COMPENSATION AGREEMENT

STATE OF MINNESOTA

Table of Contents

1. Parties and Recitals
2. Position and Duties
3. Term of Agreement
4. Commission Structure
5. Base Compensation and Commission
6. Payment Timing
7. Draw Against Commission
8. Unearned Advance Adjustments
9. Post-Termination Commission Rights
10. Quota and Performance Standards
11. Territory and Accounts
12. Expenses and Reimbursement
13. Dispute Resolution
14. Termination
15. General Provisions
16. Minnesota-Specific Notices
17. Signatures

1. Parties and Recitals

Employer:
Name: [________________________________]
Address: [________________________________]
City/State/ZIP: [____________________], MN [__________]
Phone: [________________________________]
Entity Type: [________________________________]

Employee (Sales Representative):
Name: [________________________________]
Address: [________________________________]
City/State/ZIP: [____________________], MN [__________]
Phone: [________________________________]
SSN (Last 4): [____]

Effective Date: [__/__/____]

This Commission / Sales Compensation Agreement ("Agreement") is entered into by and between the Employer and Employee identified above. The parties agree that the Employee's compensation shall be governed by the terms set forth herein, in compliance with Minnesota Statutes Chapter 181.

2. Position and Duties

Job Title: [________________________________]

Primary Responsibilities:

• [________________________________]
• [________________________________]
• [________________________________]

Reporting To: [________________________________]

Work Location: [________________________________]

Employment Status:
☐ Full-time employee
☐ Part-time employee

3. Term of Agreement

This Agreement shall commence on [__/__/____] and shall continue:

☐ Indefinitely (at-will employment) until terminated by either party
☐ For a fixed term ending on [__/__/____], subject to renewal

Minnesota generally presumes at-will employment. Unless a fixed term or other enforceable limit applies, either party may end the relationship, subject to applicable law and any notice commitment selected in this Agreement.

4. Commission Structure

Commission Type:
☐ Percentage of gross sales
☐ Percentage of net sales (after returns and allowances)
☐ Percentage of gross profit
☐ Flat fee per sale or unit
☐ Tiered/graduated commission schedule
☐ Other: [________________________________]

Commission Rate(s):

Commission Trigger Event:
☐ Upon execution of the sale or contract
☐ Upon delivery of goods or services
☐ Upon receipt of customer payment
☐ Other: [________________________________]

5. Base Compensation and Commission

Base Salary: $[________] per [☐ hour / ☐ week / ☐ month / ☐ year]

Total Compensation Structure:
☐ Base salary plus commission
☐ Commission only (see Draw provision in Section 7)
☐ Draw against commission (see Section 7)

6. Payment Timing

Commission Payment Schedule:
☐ Each regular pay period
☐ Monthly, on or before the [____] day of the following month
☐ Other: [________________________________]

Regular Pay Period: [________________________________]

Employee wages must be paid at least once every 31 days, and earned commissions at least once every three months, on a regular payday designated in advance under Minn. Stat. § 181.101. Commissions shall be calculated and paid no later than [____] days after the end of the period in which they were earned, subject to that statutory outer limit.

7. Draw Against Commission

☐ This section applies / ☐ This section does not apply

Draw Amount: $[________] per [☐ week / ☐ pay period / ☐ month]

Draw Type:
☐ Recoverable draw (advances offset against future commissions)
☐ Non-recoverable draw (guaranteed minimum, not offset)

Negative Balance: If commissions earned are less than draws paid, the parties select the treatment below. No draw or offset may reduce wages below an applicable minimum wage or authorize a deduction barred by Minn. Stat. § 181.79.
☐ The deficit carries forward to the next period(s)
☐ The deficit is forgiven at the end of each [☐ month / ☐ quarter / ☐ year]
☐ Other: [________________________________]

8. Unearned Advance Adjustments

☐ This section applies / ☐ This section does not apply

This section applies only to amounts expressly identified as advances before the commission becomes earned under Section 4. A customer event below may affect an unearned advance only if the selected earning trigger and written commission schedule make that event a condition of earning the commission. Once earned, a commission is not reversed because the customer later cancels, returns a product, or fails to pay. No adjustment under this section authorizes a deduction from wages due or earned; any recovery of an employee debt must separately comply with Minn. Stat. § 181.79 where applicable.

☐ Customer cancels order within [____] days of sale
☐ Customer returns product within [____] days
☐ Customer defaults on payment within [____] days
☐ Other: [________________________________]

Advance Review Period: [____] days from the date an unearned advance was paid. This period does not change the agreed earning trigger or defer payment of earned commissions.

9. Post-Termination Commission Rights

Ending employment does not forfeit commissions already earned under this Agreement. For sales activity before separation, the earning conditions in Section 4 continue to control even if the commission becomes earned after employment ends. The Employer shall pay commissions that become earned under this Agreement on the applicable regular commission payday, subject to Minnesota's final-pay rules for amounts already earned and unpaid at separation.

Additional post-termination rights, if offered:

☐ Commissions on sales closed but not yet paid by customers as of termination, even if Section 4 would not otherwise make them earned
☐ Commissions on pending orders submitted before the termination date that close within [____] days after termination, even if Section 4 would not otherwise make them earned
☐ Other additional rights: [________________________________]

Payment of Final Commissions: This is an employee agreement. Earned and unpaid commissions at discharge are due on written demand under Minn. Stat. § 181.13; if not paid within 24 hours after demand, the statutory daily-earnings penalty may apply. On resignation, Minn. Stat. § 181.14 generally requires payment by the first regular payday, with its five-day/second-payday and 20-day limits, subject to any applicable collective bargaining agreement or special rule. If the resignation payment deadline passes, a written demand followed by 24 hours without payment may trigger the penalty. Section 181.14, subd. 4, allows a ten-calendar-day audit for an employee entrusted with money or property. Minn. Stat. § 181.145's three-/six-working-day rules apply to certain independent-contractor commission salespeople, not this employee plan.

10. Quota and Performance Standards

Sales Quota:
☐ Monthly quota: $[________]
☐ Quarterly quota: $[________]
☐ Annual quota: $[________]

Consequences of Failing to Meet Quota:
☐ Performance improvement plan
☐ Reduced commission rate of [____]%
☐ Reassignment of territory or accounts
☐ Grounds for termination
☐ Other: [________________________________]

11. Territory and Accounts

Assigned Territory: [________________________________]

Account Assignment:
☐ Exclusive territory — Employee is sole representative in the defined area
☐ Non-exclusive territory — Employer may assign additional representatives
☐ Named accounts only (see attached Exhibit A)

Territory Modifications: The parties may modify territories by a written amendment signed by both parties with [____] days' advance notice. A change does not reduce commissions already earned under this plan.

12. Expenses and Reimbursement

Reimbursable Expenses:
☐ Mileage at IRS standard rate ($[____] per mile)
☐ Travel expenses (airfare, lodging, meals) with prior approval
☐ Client entertainment with prior approval up to $[________] per [☐ month / ☐ quarter]
☐ Office supplies and equipment
☐ Other: [________________________________]

Expense Reporting Deadline: Expenses must be submitted within [____] days of being incurred.

13. Dispute Resolution

In the event of a dispute arising out of or relating to this Agreement:

Step 1 — Internal Resolution: The parties shall attempt to resolve the dispute through good-faith negotiation within [____] business days.

Step 2 — Mediation/Arbitration:
☐ Binding arbitration in [________________________________], Minnesota, under the rules of [________________________________]
☐ Mediation before [________________________________]
☐ Litigation in the courts of the State of Minnesota, [________________________________] County

14. Termination

By Employer:
☐ At will, with or without cause
☐ For cause, including but not limited to: [________________________________]
☐ With [____] days' written notice

By Employee:
☐ At will, with or without cause
☐ With [____] days' written notice

Effect of Termination: Upon termination, all company property, client lists, and proprietary materials must be returned within [____] business days. Commission payments after termination shall be governed by Section 9.

15. General Provisions

Entire Agreement: This Agreement constitutes the entire agreement between the parties and supersedes all prior negotiations, representations, or agreements.

Amendments: This Agreement may be modified only by written instrument signed by both parties. Commission rate changes require [____] days' advance written notice to Employee.

Severability: If any provision is found invalid or unenforceable, the remaining provisions shall remain in full force and effect.

Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.

Protected Discussions and Proprietary Information: Nothing in this Agreement restricts rights protected by Minn. Stat. § 181.172 or 29 U.S.C. § 157, where applicable, including lawful wage discussion or protected concerted activity. Employee shall protect nonpublic customer lists, pricing strategy, and other lawfully protectable proprietary sales information, subject to those rights and lawful reports to government agencies.

16. Minnesota-Specific Notices

Written Notice Requirement: Under Minn. Stat. § 181.032(d)-(f), the Employer must provide a written wage notice at the start of employment stating the rate and basis of pay, including commission pay, and must provide written changes before they take effect.

Employee Final-Pay Deadlines (§§ 181.13–181.14): On discharge, earned commissions are due on written demand; default begins after 24 hours without payment. On resignation, use the first regular payday unless a statutory exception applies, and send any penalty-triggering written demand after payment is late. An entrusted employee's audit period is ten calendar days under § 181.14, subd. 4.

Late Payment Penalty (§§ 181.13–181.14): The employee may collect average daily earnings for each day of default, up to 15 days, when the applicable written-demand and payment conditions are met. Section 181.145's 1/15-commission penalty does not govern an employee.

Minimum Wage: Under Minn. Stat. § 177.24, the Employer must ensure that pay, including commissions, meets the current state minimum wage and any higher applicable local minimum wage. Check the rate effective during each pay period; § 177.24 adjusts the state rate annually and no longer uses the former large/small employer tiers.

Pay Frequency: Under Minn. Stat. § 181.101, employee wages must be paid at least once every 31 days and earned commissions at least once every three months, on a designated regular payday.

Wage Deductions: Under Minn. Stat. § 181.79, deductions for lost or stolen property, property damage, or claimed employee debt require voluntary written authorization after the loss or debt arises, unless a court holds the employee liable. Check other deduction rules separately.

17. Signatures

By signing below, the parties acknowledge that they have read, understand, and agree to the terms and conditions of this Agreement.

EMPLOYER:

Signature: ______________________________ Date: [__/__/____]
Printed Name: [________________________________]
Title: [________________________________]

EMPLOYEE:

Signature: ______________________________ Date: [__/__/____]
Printed Name: [________________________________]

ACKNOWLEDGMENT OF RECEIPT

☐ Employee acknowledges receipt of a signed copy of this Agreement on [__/__/____].

Sources and References:

• Minn. Stat. § 181.145: https://www.revisor.mn.gov/statutes/cite/181.145
• Minnesota Department of Labor and Industry — Wages: https://www.dli.mn.gov/business/employment-practices/wages-and-overtime-faqs
• Minn. Stat. Chapter 181: https://www.revisor.mn.gov/statutes/cite/181