Commission / Sales Compensation Agreement - Virginia

COMMISSION / SALES COMPENSATION AGREEMENT

COMMONWEALTH OF VIRGINIA

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. Virginia-Specific Notices
17. Signatures

1. Parties and Recitals

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

Employee (Sales Representative):
Name: [________________________________]
Address: [________________________________]
City/State/ZIP: [____________________], VA [__________]
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 the Virginia Wage Payment Act (Va. Code § 40.1-29) and applicable federal law.

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:

(Select one.)

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

If the at-will option is selected, either party may end the employment relationship subject to Section 14 and applicable law. If a fixed term is selected, the relationship ends on the stated date unless ended earlier under Section 14.

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:
(Select one trigger for each commission type, and identify any conditions in writing.)
☐ 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)

Employer will pay any minimum wage and overtime required for the Employee's actual work and coverage; a commission-only or draw arrangement does not by itself establish an exemption.

6. Payment Timing

Commission Payment Schedule:
☐ On each regular payday after the commission is earned
☐ Another schedule that complies with Va. Code § 40.1-29(B): [________________________________]

Regular Pay Period: [________________________________]

Commissions shall be calculated no later than [____] days after the earning event and paid on the first regular payday required by law after they are earned. A calculation or customer-payment condition shall not postpone payment of wages already 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 advances paid, any reconciliation applies only to future commission advances or other amounts that may lawfully be offset. It shall not reduce legally required minimum wages or overtime or forfeit wages already earned.
☐ The advance balance carries forward to the next period(s), subject to the preceding limit
☐ The deficit is forgiven at the end of each [☐ month / ☐ quarter / ☐ year]
☐ Other: [________________________________]

8. Clawback Provisions

☐ This section applies / ☐ This section does not apply

An advance identified in writing as conditional, or a commission that has not yet become earned under Section 4, may be adjusted if the following event occurs. This section does not forfeit already earned wages or authorize a deduction from other wages except as permitted by law and the Employee's written, signed authorization:

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

Maximum Adjustment Period: [____] days from the date of the conditional advance.

9. Post-Termination Commission Rights

Upon termination of employment (whether voluntary or involuntary), Employer shall pay all commissions already earned under Section 4. For work performed before termination that has not yet met the selected earning event, the parties choose any applicable rule below without forfeiting wages already earned:

☐ A sale closed before termination but not yet paid by the customer earns a commission when the Section 4 customer-payment event occurs.
☐ An order submitted before termination that closes within [____] days afterward earns a commission when the Section 4 closing event occurs.
☐ Other written rule for pre-termination work: [________________________________]

No commission is earned for new work first performed after the last day of employment unless the parties agree otherwise in writing.

Payment of Final Commissions: Commissions earned before separation shall be paid no later than the regular payday on which they would have been paid had employment continued, under Va. Code § 40.1-29(B). For a pre-separation sale whose agreed earning event occurs later, the parties shall use the selected trigger and applicable wage law; termination alone does not forfeit a commission already earned.

10. Quota and Performance Standards

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

Consequences of Failing to Meet Quota:
☐ Performance improvement plan
☐ Prospective commission-rate change by signed written amendment to [____]%
☐ 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 may propose prospective territory changes with [____] days' written notice and a signed amendment. Changes do not reduce commissions already earned.

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 [________________________________], Virginia, under the rules of [________________________________]
☐ Mediation before [________________________________]
☐ Litigation in a Virginia court with jurisdiction in [________________________________] City/County

14. Termination

By Employer:
(Select the applicable termination terms.)
☐ At will, with or without cause
☐ For cause, including but not limited to: [________________________________]
☐ With [____] days' written notice

By Employee:
(Select the applicable termination terms.)
☐ 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 Commonwealth of Virginia.

Protected Discussions and Proprietary Information: Nothing in this Agreement prohibits an employee from discussing wages, commissions, hours, or working conditions; engaging in protected concerted activity; reporting suspected unlawful conduct; or communicating with a government agency. Employee shall protect nonpublic customer lists, pricing strategy, and other lawfully protectable proprietary sales information, subject to those rights.

16. Virginia-Specific Notices

Virginia Wage Payment Act (§ 40.1-29): Covered employers must establish regular pay periods and rates of pay. The permitted payment methods and conditions are in subsection C; prepaid debit cards have disclosure, consent, and statutory exception rules.

Commission Wages: The current definition of "wages" in § 40.1-29(A) expressly includes commissions. Sections 4, 6, 8, and 9 state when a commission is earned and how it is paid.

Written Earnings Statement: Under Va. Code § 40.1-29(D), covered employers must provide the specified paystub or online accounting on each regular payday, with enough information to determine gross and net pay.

Private Right of Action: Under § 40.1-29(K), an employee may bring an individual or qualifying collective action for unpaid wages and the applicable statutory remedies. In actions begun on or after July 1, 2026, subsection P supplies a conditional good-faith defense to additional damages and penalties if the employer pays all withheld wages within 14 days after notice and proves its other stated conditions.

Criminal Penalties: Under § 40.1-29(F), willful or intentionally fraudulent nonpayment, absent a bona fide dispute, may be a Class 1 misdemeanor below $10,000 or a Class 6 felony at $10,000 or more or on a qualifying repeat conviction.

Wage-Concern Reports: The Employer will not retaliate against an Employee for raising a wage concern or filing a wage complaint. This is a commitment under this Agreement; § 40.1-29.2 addresses overtime liability, not retaliation.

Minimum Wage: Va. Code § 40.1-28.10 sets the rate for covered employees at the greater of $12.77 per hour or the federal minimum wage from January 1 through December 31, 2026. Check coverage under § 40.1-28.9, including its exclusion for traveling or outside salespeople working on commission, and use the rate applicable to the period worked.

Overtime: Under Va. Code § 40.1-29.2, Virginia applies the federal Fair Labor Standards Act's overtime requirements, exemptions, and calculation methods. Review the worker's duties and pay arrangement before relying on an exemption.

Retail or Service Commission Exception: 29 U.S.C. § 207(i) applies only when the employee works for a retail or service establishment, the regular rate exceeds one and one-half times the applicable federal minimum wage, and more than half of compensation over a representative period of at least one month comes from commissions. The commission label alone does not establish the exception.

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:

• Va. Code § 40.1-29: https://law.lis.virginia.gov/vacode/title40.1/chapter3/section40.1-29/
• Virginia Department of Labor and Industry: https://www.doli.virginia.gov