Commission / Sales Compensation Agreement - Vermont

COMMISSION / SALES COMPENSATION AGREEMENT

TABLE OF CONTENTS

1. Parties and Effective Date
2. Position and Territory
3. Commission Structure
4. Base Salary and Commission Split
5. Definition of Compensable Sale
6. Payment Timing
7. Draw Against Commission
8. Clawback and Chargeback Provisions
9. Post-Termination Commission Rights
10. Expense Reimbursement
11. Quota and Minimum Performance
12. Territory and Account Protection
13. Non-Compete Reference
14. Dispute Resolution
15. Termination Provisions
16. Vermont-Specific Legal Notes
17. General Provisions
18. Signatures

1. PARTIES AND EFFECTIVE DATE

Employer / Principal: [________________________________] ("Company")
Address: [________________________________]
State of Organization: [________________________________]

Employee / Sales Representative: [________________________________] ("Employee")
Address: [________________________________]

Effective Date: [__/__/____]

This Commission / Sales Compensation Agreement ("Agreement") is entered into by and between the Company and Employee as of the Effective Date set forth above.

2. POSITION AND TERRITORY

Job Title: [________________________________]

Reporting To: [________________________________]

Assigned Territory / Region: [________________________________]

Assigned Accounts / Verticals: [________________________________]

Employment Schedule: ☐ Full-Time ☐ Part-Time

This Agreement is for an employee. The parties' label does not determine worker status; classification depends on the actual working relationship under applicable law, including 21 V.S.A. § 341(1).

3. COMMISSION STRUCTURE

The Employee shall be compensated under the following commission structure:

Option A — Percentage-Based Commission

Option B — Tiered Commission

Option C — Flat Fee Per Sale

Selected Structure: ☐ Option A ☐ Option B ☐ Option C

4. BASE SALARY AND COMMISSION SPLIT

Base Salary: $[________________________________] per [☐ year / ☐ month / ☐ pay period]

Compensation Model:

• ☐ Commission Only (no base salary, subject to the applicable minimum-wage and overtime rules)
• ☐ Base Salary + Commission
• ☐ Base Salary + Commission + Bonus

Target Total Compensation (estimated): $[________________________________] per year

Pay Period for Base Salary: ☐ Weekly ☐ Bi-Weekly ☐ Semi-Monthly

For any workweek in which the Employee is covered by minimum-wage or overtime law, the Company will supplement commission pay as needed to meet those requirements. A sales title or commission-only election does not itself establish an exemption.

5. DEFINITION OF COMPENSABLE SALE

A "Sale" or "Closed Deal" for purposes of commission calculation is defined as:

[________________________________]

A commission is deemed earned when (select one; the selected event controls):

• ☐ The customer executes a binding purchase order or contract
• ☐ The customer makes full payment
• ☐ The product or service is delivered and accepted
• ☐ Other: [________________________________]

The Company will identify the credited Employee, transaction amount, applicable rate, and earning date in the commission statement. An earning event satisfied before separation is not undone solely by separation.

Excluded from commission calculation:

• ☐ Returns, cancellations, or chargebacks within [____] days
• ☐ Internal or employee sales
• ☐ Sales below $[________________________________]
• ☐ Other: [________________________________]

These exclusions determine whether a commission becomes earned under the selected event; they do not authorize recovery of an earned wage by themselves.

6. PAYMENT TIMING

Commission Payment Schedule:

• ☐ Weekly, on the regularly designated payday
• ☐ Bi-weekly, on designated paydays (with employee notice)
• ☐ Semi-monthly, on designated paydays (with employee notice)
• ☐ Other: [________________________________]

Earned commissions are wages under 21 V.S.A. § 341(5) and will be paid no less often than the applicable schedule under § 342. The "Other" option may be used only for a lawful schedule.

Commission Statements: The Company shall provide the Employee with a written commission statement on each commission payment date detailing the basis for the commission calculation.

7. DRAW AGAINST COMMISSION

Draw Applicable: ☐ Yes ☐ No

If Yes:

Draw Amount: $[________________________________] per [________________________________]

Draw Type:

• ☐ Recoverable Draw (advance against future commissions)
• ☐ Non-Recoverable Draw (guaranteed minimum)

Recovery Terms (Recoverable Draw): A recoverable draw is an advance against future commissions. Record each advance and offset on the commission statement. The Company will not treat a negative draw balance as an automatic personal debt or deduct it from base pay or other earned wages without a separately established lawful basis. Additional terms: [________________________________]

8. CLAWBACK AND CHARGEBACK PROVISIONS

Clawback Applicable: ☐ Yes ☐ No

Clawback Period: [____] days from date of commission payment

Triggering Events:

• ☐ Customer cancellation within [____] days of sale
• ☐ Customer non-payment or default
• ☐ Return of product within [____] days
• ☐ Other: [________________________________]

Chargeback Calculation Method:
[________________________________]

A chargeback may adjust a commission that has not yet been earned under Section 5 or may be applied to earned wages only to the extent separately permitted by applicable law. The Company will give the Employee a written calculation and will pay undisputed wages when due. Customer nonpayment does not, by itself, authorize a deduction from earned wages.

9. POST-TERMINATION COMMISSION RIGHTS

Commissions Earned Before Termination:
All commissions earned before separation will be included in final wages and paid when required by § 342. If an earned amount cannot yet be calculated, the Company will give a written accounting of the outstanding transaction and pay the amount when required by applicable law after it becomes calculable:

• Discharge / Involuntary Termination: Within seventy-two (72) hours of discharge (21 V.S.A. § 342(b))
• Voluntary Resignation: On the last regular payday, or if there is no regular payday, on the following Friday (21 V.S.A. § 342(b))

Commissions on Pending Sales:

• ☐ Employee is entitled to commissions on deals substantially procured by Employee but closed within [____] days after termination
• ☐ No commission is earned on a pending deal unless it later satisfies the earning event in Section 5
• ☐ Pro-rated commission on deals in progress at termination
• ☐ Other: [________________________________]

Select a treatment consistent with Section 5. A commission earned after separation under the selected terms will be paid when required by § 342 and applicable law after it becomes calculable; this paragraph does not forfeit wages already earned.

10. EXPENSE REIMBURSEMENT

The Company shall reimburse Employee for the following pre-approved business expenses:

• ☐ Mileage at $[____] per mile
• ☐ Client entertainment (pre-approved)
• ☐ Travel expenses
• ☐ Cell phone / internet
• ☐ Other: [________________________________]

Reimbursement Procedure: Expenses must be submitted within [____] days with receipts via [________________________________].

11. QUOTA AND MINIMUM PERFORMANCE

Sales Quota: $[________________________________] per [☐ month / ☐ quarter / ☐ year]

Quota Review Period: [________________________________]

Consequences of Failing to Meet Quota:

• ☐ Performance improvement plan
• ☐ Reduction in territory
• ☐ Adjustment to commission rate (prospective only)
• ☐ Termination of employment
• ☐ Other: [________________________________]

12. TERRITORY AND ACCOUNT PROTECTION

Exclusive Territory: ☐ Yes ☐ No

If Yes, the Company shall not assign another salesperson to Employee's designated territory during the term of this Agreement, except:
[________________________________]

Account Ownership Rules:
[________________________________]

Split Commission Policy (if applicable):
[________________________________]

13. NON-COMPETE REFERENCE

☐ A separate Non-Compete / Non-Solicitation Agreement is attached or incorporated by reference.

☐ A separate Confidentiality and Proprietary Information Agreement is attached or incorporated by reference.

14. DISPUTE RESOLUTION

Governing Law: This Agreement shall be governed by the laws of the State of Vermont.

Venue: [________________________________] County, Vermont

Dispute Resolution Method:

• ☐ Litigation in state or federal court
• ☐ Binding Arbitration under [________________________________] rules
• ☐ Mediation followed by Arbitration

ACKNOWLEDGMENT OF ARBITRATION. I understand that this Agreement contains an agreement to arbitrate. After signing this Agreement, I understand that I will not be able to bring a lawsuit concerning any dispute that may arise which is covered by the arbitration agreement, unless it involves a question of constitutional or civil rights. Instead, I agree to submit any such dispute to an impartial arbitrator.

Employer, by authorized representative: [SIGNATURE / NAME / TITLE / DATE]

Employee: [SIGNATURE / NAME / DATE]

This arbitration clause does not prevent a party from seeking court assistance to enforce constitutional or civil rights. Either arbitration choice applies only if both parties sign this acknowledgment; otherwise the litigation choice governs.

15. TERMINATION PROVISIONS

Employment Relationship: Employment is at will, subject to applicable law and any written termination-notice term selected below. This Agreement does not promise employment for a fixed term.

Notice of Termination (select one):

• ☐ At-will; no notice required by either party
• ☐ [____] days' written notice required by either party

Upon Termination:

1. All earned commissions shall be paid per Section 9
2. Company property must be returned within [____] days
3. Outstanding draw balances handled per Section 7

Modification of Commission Plan:
The Company reserves the right to modify this commission plan with [____] days' written notice. Changes apply prospectively only and do not affect commissions already earned.

16. VERMONT-SPECIFIC LEGAL NOTES

Weekly Pay Default (21 V.S.A. § 342): Vermont requires weekly wage payment by default. Employers may elect biweekly or semi-monthly payment after giving notice to each employee.

Final Pay — Discharge (§ 342(b)): Discharged employees must be paid all earned wages within 72 hours of discharge.

Final Pay — Voluntary Quit (§ 342(b)): Employees who voluntarily resign must be paid on the last regular payday, or on the following Friday if there is no regular payday.

Minimum Wage Floor (§ 384(a)): For an employee covered by the Vermont minimum-wage provision, commissions and other compensation must satisfy the applicable minimum wage for the work performed. Check the worker and pay arrangement before applying this provision.

Deductions and Clawbacks: Evaluate any proposed deduction or clawback under the applicable wage-payment rules and the signed agreement; § 384 is the minimum-wage provision, not a general deduction-authorization statute.

Pay Transparency: Under 21 V.S.A. § 495p, an employer with at least five employees must include compensation or a range in an advertisement for a Vermont job opening. Commission-based openings have a separate disclosure rule. This advertising rule does not require a range in this agreement.

At-Will Employment: Vermont recognizes a public-policy limit on at-will discharge. This Agreement's compensation terms remain binding while employment is at will.

17. GENERAL PROVISIONS

Entire Agreement: This Agreement constitutes the entire agreement between the parties concerning commission compensation and supersedes all prior agreements on this subject.

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

Amendment: This Agreement may only be amended in writing signed by both parties.

Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original.

18. SIGNATURES

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

EMPLOYER

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

EMPLOYEE

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

SOURCES AND REFERENCES

• 21 V.S.A. § 342 — Frequency of Wage Payment
• 21 V.S.A. § 384 — Minimum Wage
• 21 V.S.A. § 495p — Compensation in Job Advertisements