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:

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

Virginia is an at-will employment state. Unless a fixed term is specified above, either party may terminate the employment relationship at any time, with or without cause or notice.

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 (per Va. Code § 40.1-29)
☐ Semimonthly
☐ 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: All earned and unpaid commissions shall be paid by the next regularly scheduled payday following the date of separation, in accordance with Va. Code § 40.1-29.

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 [________________________________], Virginia, under the rules of [________________________________]
☐ Mediation before [________________________________]
☐ Litigation in the courts of the Commonwealth of Virginia, [________________________________] Circuit

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 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): Employers must establish regular pay periods and rates of pay. Payment must be in lawful money, by check, by electronic funds transfer, or by prepaid debit card (with consent).

Evolving Commission Law: Virginia courts are actively interpreting whether commissions constitute "wages" under § 40.1-29 for purposes of the wage theft provisions. The Court of Appeals held commissions are wages (2024); the Supreme Court of Virginia has taken a narrower view. This written agreement provides contractual protections independent of the statutory interpretation.

Written Earnings Statement: Under Va. Code § 40.1-29, employers must provide a written statement showing gross wages earned, deductions, and net pay for each pay period.

Private Right of Action: Under § 40.1-29, an employee may bring an individual or collective action for unpaid wages, recovering the wages owed plus an equal amount as liquidated damages, prejudgment interest, and reasonable attorney fees and costs.

Criminal Penalties: Under § 40.1-29, willful failure to pay wages with intent to defraud is a Class 1 misdemeanor (under $10,000) or Class 6 felony ($10,000 or more).

Anti-Retaliation: Under § 40.1-29.2, employers may not retaliate against employees who file wage complaints or exercise their rights under the Act.

Minimum Wage: Under Va. Code § 40.1-28.9, Virginia's minimum wage is $12.41/hour (2025+). Commission earnings combined with base pay must meet or exceed this threshold.

Overtime: Under Va. Code § 40.1-28.10, overtime is required at 1.5 times the regular rate for hours exceeding 40 per workweek, subject to FLSA exemptions including the retail/service commission exemption (29 U.S.C. § 207(i)).

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
• Virginia Lawyers Weekly — Commission Case Law: https://valawyersweekly.com/2024/12/03/employment-virginia-wage-payment-act-applies-to-commissions/