Commission / Sales Compensation Agreement - New Mexico

COMMISSION / SALES COMPENSATION AGREEMENT

STATE OF NEW MEXICO

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. New Mexico-Specific Notices
17. Signatures

1. Parties and Recitals

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

Employee (Sales Representative):
Name: [________________________________]
Address: [________________________________]
City/State/ZIP: [____________________], NM [__________]
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 New Mexico Statutes Annotated, Chapter 50, Article 4.

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 the termination terms selected in Section 14 and any controlling employment agreement or policy
☐ For a written definite period ending on [__/__/____], subject to the termination and renewal terms stated here: [________________________________]

Controlling Employment Documents: [☐ none ☐ offer letter ☐ employment agreement ☐ handbook/policy ☐ collective bargaining agreement ☐ other: ________________________________]. Review those documents together with this Agreement before selecting any termination right or final-pay route.

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: [________________________________]

Complete the Earning Rule:

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:
☐ Regular paydays not more than sixteen days apart under NMSA 1978, § 50-4-2(A)
☐ Monthly on or before the tenth day of the succeeding month under a written agreement made at hiring for compensation calculated on a task, piece, commission, or other non-fixed basis under § 50-4-2(B)
☐ Monthly under § 50-4-2(C) because Employee is properly classified within a listed federal-FLSA category; classification reviewed by: [________________________________]
☐ Other lawful schedule reviewed by counsel: [________________________________]

Regular Pay Period: [________________________________]

Commissions shall be calculated and paid on the selected lawful payday after they become earned and calculable under Section 4. Each wage payment must include the written receipt required by § 50-4-2(B), including gross pay, hours worked, total wages and benefits earned, and itemized deductions.

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: [________________________________]

Recovery Gate: A recoverable draw, carryforward, payroll deduction, or offset applies only to the extent stated in a lawful written hiring agreement and permitted by NMSA 1978, § 50-4-2(B) and other applicable law. No unrecovered balance will be deducted from final pay or treated as a personal debt unless a separate lawful written agreement expressly supports that result after counsel review.

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.

Adjustment Method: [☐ the commission remains conditional until the selected event occurs ☐ a future commission offset may be used if lawful ☐ other: ________________________________]. A later cancellation, return, or nonpayment does not retroactively change an earned commission unless the earning rule above expressly made the commission conditional and the adjustment is lawful. No adjustment may be taken as an undisclosed or unlawful wage deduction.

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 (NMSA § 50-4-4):
• Upon demand, fixed and definite compensation that is not based on task, piece, commission, or another calculation method is due within five days.
• Commission-based or other non-fixed compensation must be settled and paid within ten days.

• Continuing wages under § 50-4-4(C) require a demand made within a reasonable time at the designated payment place and a refusal to pay, and may not extend beyond sixty days after discharge.

• Resignation (NMSA § 50-4-5): For an employee who does not have a written contract for a definite period, wages and compensation are due on the next succeeding payday. A definite-period written contract requires separate review.

• Disputed Amounts (NMSA § 50-4-7): The Employer must give written notice of the amount conceded due and pay that amount unconditionally within the applicable statutory time. Acceptance does not release a claim to the disputed balance.

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

Any arbitration, forum, fee, limitation, or waiver term must be reviewed for the actual claims and parties. Nothing in this Agreement waives, limits, or delays a nonwaivable wage right, agency filing, or remedy except to the extent current law permits.

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 a written instrument delivered to the Employee and signed by the authorized parties. A change applies prospectively on [__/__/____] to transactions identified as follows: [________________________________]. It does not retroactively change a commission already earned under the prior written terms.

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 New Mexico.

Confidentiality: Employee shall protect nonpublic customer, pricing, product, and sales information identified as confidential. This clause does not restrict discussion or disclosure of wages, commissions, working conditions, or other information protected by applicable law.

16. New Mexico-Specific Notices

Wage Definition: Under NMSA 1978, § 50-4-1(B), "wages" includes amounts at which labor or service is recompensed whether fixed or calculated on a time, task, piece, commission, or other basis.

Pay Timing and Wage Statement: Section 50-4-2(A) generally requires regular paydays not more than sixteen days apart and supplies specific first-half and second-half payment dates. Section 50-4-2(B) permits monthly payment on or before the tenth of the succeeding month for task, piece, commission, or other non-fixed compensation only through a written agreement made at hiring. It also restricts deductions and requires a detailed written wage receipt. Subsection C supplies a separate monthly-pay route for properly classified professional, administrative, executive, or outside-sales employees.

Discharge — Final Pay (§ 50-4-4):

• Fixed and definite amounts not based on task, piece, commission, or another calculation method: upon demand, within five days
• Commission and other non-fixed compensation: settlement and payment within ten days
• Continuing wages: only after the statutory demand-and-refusal conditions are proved, capped at sixty days after discharge

Resignation — Final Pay (§ 50-4-5): The next-payday rule applies to an employee without a written contract for a definite period.

Minimum Wage Act Coverage: NMSA 1978, § 50-4-21(C)(4) excludes salespersons or employees compensated on a piecework, flat-rate, or commission basis from the state Minimum Wage Act's definition of employee. The label used in this Agreement does not decide coverage; actual duties and compensation facts must be reviewed. Federal law and local ordinances may impose separate or higher wage-and-hour duties.

State Wage Floor and Overtime if Covered: For a worker covered by the New Mexico Minimum Wage Act, § 50-4-22 currently states a $12.00 hourly minimum and time-and-one-half after forty hours in a seven-day week. Section 50-4-26 supplies remedies for covered § 50-4-22 violations. Confirm federal and applicable local requirements before each payroll cycle.

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:

• Official New Mexico Statutes Annotated, Chapter 50: https://nmonesource.com/nmos/nmsa/en/4420/1/document.do
• New Mexico Department of Workforce Solutions: https://www.dws.state.nm.us