COMMISSION / SALES COMPENSATION AGREEMENT

STATE OF MONTANA

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. Clawback Provisions
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. Montana-Specific Notices
17. Signatures

1. Parties and Recitals

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

Employee (Sales Representative):
Name: [________________________________]
Address: [________________________________]
City/State/ZIP: [____________________], MT [__________]
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 Montana Code Annotated Title 39, Chapter 3.

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, subject to Montana's Wrongful Discharge from Employment Act
☐ For a fixed term ending on [__/__/____], subject to renewal

Probationary Period: [____] months from the date of hire (if no probationary period is specified, the default under MCA § 39-2-903(8), as amended by 2021 HB 254, is 12 months; maximum 18 months).

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: [________________________________]

Commissions shall be calculated and paid no later than [____] days after the end of the period in which the commission was earned.

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 deficit carries forward to the next period(s)
☐ The deficit is forgiven at the end of each [☐ month / ☐ quarter / ☐ year]
☐ Other: [________________________________]

8. Clawback Provisions

☐ This section applies / ☐ This section does not apply

Commissions previously paid may be subject to clawback under the following circumstances:

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

Maximum Clawback Period: [____] days from the date commission was paid.

9. Post-Termination Commission Rights

Upon termination of employment (whether voluntary or involuntary), the Employee shall be entitled to:

☐ All commissions earned and unpaid through the last day of employment
☐ Commissions on sales closed but not yet paid by customers as of termination
☐ Commissions on pending orders submitted before the termination date that close within [____] days after termination
☐ No post-termination commissions beyond the last day of employment

Payment of Final Commissions:

• Discharge: Under MCA § 39-3-205, when an employee is discharged, wages (including commissions) earned and unpaid at the time of discharge are due and payable immediately.

• Resignation: When an employee quits, wages (including commissions) are due on the next regular payday or within fifteen (15) days of resignation, whichever comes first.

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 (must meet "good cause" standard post-probation)
☐ 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: Employer reserves the right to modify territories with [____] days' written notice.

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 [________________________________], Montana, under the rules of [________________________________]
☐ Mediation before [________________________________]
☐ Litigation in the courts of the State of Montana, [________________________________] County

14. Termination

By Employer:
☐ During probationary period: with or without cause
☐ After probationary period: for good cause only (per MCA § 39-2-904)
☐ With [____] days' written notice

By Employee:
☐ At any time, 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 Montana.

Confidentiality: Employee agrees to maintain the confidentiality of commission rates, compensation structure, and proprietary sales information.

16. Montana-Specific Notices

Not At-Will Employment: Montana is the only state that is NOT an at-will employment state. After the probationary period (default 12 months under MCA § 39-2-903(8), as amended by 2021 HB 254; maximum 18 months), employees may only be discharged for "good cause."

Wage Definition: Under MCA § 39-3-201, "wages" includes any money due an employee from an employer, including commissions, bonuses, tips, and gratuities.

10-Business-Day Rule: Under MCA § 39-3-204, wages may not be withheld for more than 10 business days after they are due and payable.

Immediate Payment on Discharge: Under MCA § 39-3-205, upon discharge, all earned wages including commissions are due immediately, unless the employer has a written personnel policy providing for payment by the next regular payday or within 15 days, whichever comes first.

Penalty Wages: Under MCA § 39-3-206, if an employer fails to pay wages when due, the penalty shall not exceed 110% of the wages due and unpaid.

Overtime Exemption: Under MCA § 39-3-406, certain commission-based auto/truck/mobile home/RV/farm implement salespeople, parts persons, and mechanics are exempt from overtime.

Minimum Wage: Under MCA § 39-3-409, Montana's minimum wage is adjusted annually for CPI. Total compensation must meet or exceed this amount.

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:
- MCA Title 39, Chapter 3 — Wages and Wage Protection: https://leg.mt.gov/bills/mca/title_0390/chapter_0030/parts_index.html
- Montana Department of Labor — Wage Payment Act: https://erd.dli.mt.gov/labor-standards/wage-and-hour-payment-act/wage-payment-act
- MCA § 39-2-901 et seq. — Wrongful Discharge from Employment Act