State laws that affect the relationship between a manufacturer and a commissioned independent sales representative

You need to make sure you understand the law if you are a manufacturer or an independent sales representative. For this chart, the following definitions shall apply.

 

Referenced in a Statute as:

Referred to Here as:

Manufacturer, Principal or Employer

Mfg.

Commissioned Sales Person, Wholesale Sales Representative, Sales Representative, Employee (Iowa)

Rep

Contract

K

The Headings used are defined or explained as:

State: This is the state where the law is applicable. Most of the statutes, however, say that a rep can sue for unpaid commissions in this state for money owed by the manufacturer in other states. Eleven states require a written contract between the Mfg. and the Rep. Three states probably require a written contract between a Mfg. and Rep. All states say that a request to pay a person a commission for a sale is a contract.

Statute Name & Number: This is the name of the statute and number of the statute. This is always linked to the statute.

K Required: This means the burden is on the Manufacturer to create a written contract. Many of the statutes require not only a signature of both parties but proof in the form of a receipt that the rep has received a copy of the contract.

Written K Controls (except non-payment issues): If there is a dispute or the written contract is different from the statute the written contract controls the payment of commissions upon termination.

Other K Requirements: Any special or unique issues in the statute that may be of importance.

Pay upon Termination: This is what the statute requires as far as commissions paid upon termination of the contract with the Rep.

Damages: If the Rep is not paid as per the contract or the statute, this sets forth the damages that a rep can recover for non-payment. Most states this is a factor of the commissions owed, which can be as much as four times the commissions owed. Iowa, Michigan, Minnesota and Missouri have more complicated ways of determining damages based upon the time until paid or other ways to calculate the damages.

Most states allow a rep, if successful in a suit to recover unpaid commission’s damages in excess of the commissions owed. In several cases that amount totals four times the commissions owed. If the rep is successful in recovering damages, the rep can also recover attorney fees and court costs.

Eight states allow the Mfg. to recover attorney fees and court costs if the lawsuit filed by the Rep was frivolous. Frivolous in a legal context means there was no basis for the suit. Have a claim and losing it for some reason, is not frivolous.

Most states require commissions that were earned but not due until after the termination of the Contact between the Mfg., and the Rep must be paid to the Rep.

Court Costs & Atty Fees: Either the Rep or in a few cases, the Prevailing party (winner) can recover court costs and attorney’s fees if they successfully sue for unpaid commissions.

Suit brought in a state of Rep Choice: This statute states that even though the Mfg. may not have a business location within the state, which would normally be needed to establish venue and jurisdiction over the manufacturer, the statute provides the necessary venue and jurisdiction. That means the manufacturer can be brought to suit in that state.

K can waive the statute: This means that a contract between the Rep and the Mfg. cannot waive parts of the statute, specifically the requirement on how commissions are to be paid on termination, damages, attorney fees and costs and whether and jurisdiction and venue are established.

Misc.: More unique or important sections of the statute you should know about.

 

This information is here as a starting point. Contact your attorney for additional information.

Click here to download a copy of this chart

27 state laws and short interpretations are listed below.

State Statute Name & Number K Required Written K Controls (except non-payment issues) Other K Requirements Pay upon Termination Damages Court Costs & Atty Fees Suit brought in state of Rep Choice K can waive statute Misc
Alabama Alabama Code Annotated § 8-24-1 Maybe§ 8-24-2 Yes§ 8-24-2 Contract must set forth how commission calculated and to be paid. Mft must provide copy of contract to rep§ 44-1798.01 30 Days after termination30 Days post termination§ 8-24-2(c) Three times damages§ 8-24-3 Reasonable Attorney fees and Costs§ 8-24-3 Yes§ 8-24-4 No§ 8-24-5 Rep can bring all claims against mfg in this action§ 8-24-5
Arizona Arizona Revised Statutes § 44-1798.01 Yes§ 44-1798.01 A Rep must receive a signed copy of the contract and sign a receipt acknowledging receipt of signed copy§ 44-1798.01 B Paid within 30 days§ 44-1798.02 A14 days on commissions due after termination§ 44-1798.02 B Three times the unpaid commissions owed§ 44-1798.02 C Reasonable attorney fees and costs§ 44-1798.02 D Final Settlement null & void unless paid in full§ 44-1798.02 F
Arkansas Arkansas Code of 1987
4-70-301
Yes4-70-302(a) Method of computation and payment must be in written contract4-70-302(a)Rep must receive copy of contract 4-70-302(b) If not written contract, all commissions must be paid within 30 days after termination4-70-303 3 times damages4-70-306 Reasonable attorney fees and costs4-70-306 Yes4-70-302(c)4-70-304 Waiver of statute is void4-70-305
California California Codes Annotated § 1738.10Independent Wholesale Sales Representatives Contractual Relations Act of 1990§ 1738.11 Yes§ 1738.13(a) Commission Rate, Payment dates, Territory, Territory Exceptions, ChargebacksRep must be given a copy of the contract, sign it and sign a receipt acknowledging receipt of the signed contract§ 1738.13(b) Treble DamagesFailure to pay or Failure to have written contract§ 1738.15 The Prevailing Party can recover Reasonable Attorney Fees & Costs§ 1738.16 Yes§ 1738.14 No§ 1738.13(e) Rep must receive written info of all orders, customer name and invoice numberCommission rate on each order§ 1738.13(c)
Colorado Colorado Revised Statutes 12-66-101 Probably§ 12-66-103 Treble damages12-66-103(1) Prevailing Party receives Reasonable attorney fees and costs Yes12-66-102
Illinois Sales Representative Act. Illinois Compiled Statutes Annotated § 820 ILCS 120/0.01. 13 days after termination and 13 days if commissions become payable after termination§ 820 ILCS 120/2 Exemplary damages of 3 times commissions owed§ 820 ILCS 120/3 Reasonable attorney fees and court costs to rep§ 820 ILCS 120/3 No§ 820 ILCS 120/2
Indiana Indiana Statutes Annotated 24-4-7-0.1 Must be paid within 14 days24-4-7-5(a) Exemplary Damages Three times the commissions owed24-4-7-5(b) If exemplary damages awarded, the sales rep receives reasonable attorney fees and costs24-4-7-5(c)If suit is frivolous, the mfg can receive reasonable attorney fees and costs 24-4-7-5(c) Yes24-4-7-6 No24-4-7-8 If you make an offer to pay commissions you cannot revoke the offer once the commissions are earned 24-4-7-7
Iowa Iowa Wage Payment Collection Law
Iowa Code 91A.1
5% per day for every day not paid91A.2 6 Yes if intentionally failed to pay91A.8 Only disputed amounts can be withheld, all non-disputed amounts of commissions must be paid91A.7
Louisiana Louisiana Revised Statutes § 51:441 Yes§ 51:442 A written contract supersedes statute on payment of wages§ 51:442 Rep must receive a copy of the contract§ 51:442 Per the contract or On the 30th working day after termination§ 51:443 Treble damages§ 51:444 Rep’s Attorney fees§ 51:444 Yes§ 51:445 A§ 51:445 C No§ 51:445 B Sales Rep can sue for all money owed under this statute.Statute does not prohibit other seeking other forms of relief§ 51:445 D
Maine Maine Revised Statutes Annotated § 1341 Unless otherwise in contract requires 14 days’ notice to terminate§ 1342 Payment within 30 days of termination§ 1343 Exemplary damages of 3 times commissions owed§ 1344 1 Reasonable attorney fees and costs§ 1344 1 Yes§ 1344 4 Yes§ 1343 If action was frivolous mfg can recover actual attorney fees and costs§ 1344 2
Maryland Annotated Code of Maryland
§ 3-601
Commissions must be paid within 45 days of termination§ 3-604 Can recover up to 3 times the commissions due§ 3-605(a)(1) Reasonable attorney fees and costs§ 3-605(b) Yes§ 3-606 Law cannot be waived§ 3-603 Rep must give mfg 10 days’
Massachusetts Annotated Laws of Massachusetts
Chpt 104 § 7
YesChpt 104 § 8 Commissions must be paid within 14 days of terminationChpt 104 § 8Commissions that come due after termination must be paid within 14 daysChpt 104 § 8 Willfully or knowingly fails to pay, rep can recover an additional 3 times the amount dueChpt 104 § 9 Rep can recover reasonable attorney fees and court costsChpt 104 § 9 Yes104 § 9 NoChpt 104 § 9
Michigan Michigan Compiled Laws § 600.2961 YesSec. 2961(e)(2) Commissions must be paid within 45 days of termination§ 600.2961(e)(4) Actual damages plus 2 times amount of commissions or $100K or whatever is less§ 600.2961(e)(5)(b) Rep can recover reasonable attorney fees and costs§ 600.2961(e)(5) No§ 600.2961(e)(8)
Minnesota Minnesota Statutes 181.13 Yes§ 407.912 3 days after termination181.145 Subd 2 Penalty of 1/15 per day not to exceed 15 days181.145 Subd 3 Yes181.171 Subd 3 Sales made before termination must be paid after termination181.145 Subd 5
Missouri Missouri § 407.911 Yes§ 407.912 Within 30 days of termination§ 407.912 Based on the time due till paid§ 407.913 Reasonable attorney fees and costs§ 407.913 Yes§ 407.914 No§ 407.915 Rep to be paid on commissions earned before termination but not due until after termination§ 407.912 2
Nebraska Nebraska Wage Payment and Collection Act Nebraska Revised Statutes Annotated § 48-1229 30 days after termination§ 48-1231(1) Court Costs and attorney fees of not less than 25% of damages§ 48-1231(1) Damages are increased if case appealed§ 48-1231(1)
New Hampshire Sales Representatives and Post-Termination Commissions New Hampshire Revised Statutes Annotated 339-E:1 Yes339-E:2 Commissions must be paid within 45 days of termination339-E:2 Exemplary damages of 3 times commission339-E:3 Reasonable attorney fees and costs339-E:3 Yes339-E:4 No339-E:2 & 339-E:6 Commissions must be paid on orders before termination§ 2A:61A-2If Sales Rep brings frivolous suit mfg. can recover attorney fees§ 2A:61A-3
New Jersey New Jersey Annotated Statutes
§ 2A:61A-1.
Must be paid within 30 days§ 2A:61A-2 Exemplary damages of 3 times amount of commissions owed§ 2A:61A-3 Actual and reasonable attorney fees and costs§ 2A:61A-3 Yes§ 2A:61A-5 No§ 2A:61A-6
New York New York Consolidated Laws
§ 190
Yes§ 191-b 1 Yes, K must be signed by both parties and kept on file at mfg. for 3 years§ 191 b Must be paid within 5 business days§ 191-c 1 Double damages§ 191-c 3 Prevailing party receives reasonable attorney fees and costs§ 191-c 3 Commissions must be paid at least monthly§ 191 cCommissions earned after termination must be paid§ 191-a (b)
North Carolina General Statutes of North Carolina § 66-190 Yes§ 66-190.1 30 days after termination unless rep commits malfeasance§ 66-191 2 times damages§ 66-192(a) Attorney fees actually and reasonably incurred and court costs§ 66-192(c) Yes§ 66-192(c) No§ 66-193 Commissions that come due after termination must be paid within 15 days§ 66-191
Oklahoma Sales Representatives Recognition Act Oklahoma Statutes Annotated § 675 Yes§ 677 1 14 days after termination14 days on commissions that come due after termination§ 678 A Prevailing party reasonable attorney fees and costs§ 678 B Yes§ 679 A No§ 679 B Rep can recover all claims in OK case against mfg§ 679 C
Pennsylvania Commissioned Sales Representatives Pennsylvania Statutes Annotated § 1471 Yes§ 1472 Yes§ 1475.1 14 days after termination§ 147314 days on commissions earned after termination§ 1474 2 times the commissions due§ 1475(a)(1) Cost of the suit and reasonable attorney fees§ 1475(a)(2) No§ 1476 If case is frivolous then mfg can recover reasonable attorney fees and costs§ 1475(b)
South Carolina Payment Of Post-Termination Claims To Sales Representatives South Carolina Code of Laws § 39-65-10 Seems to be.§ 39-65-20 Yes§ 39-65-20 Paid as terms of the contract§ 39-65-20 Commissions due plus 3 times damages§ 39-65-30(1) Actually and reasonably incurred attorney fees and court costs§ 39-65-30(2) Yes§ 39-65-50 No§ 39-65-70 If the suit brought by the Rep is frivolous the mfg may recover attorney fees and costs§ 39-65-40Rep may bring all actions against mfg in SC§ 39-65-60
Tennessee Tennessee Code Annotated § 47-50-114 Yes47-50-114 (b) (1) Yes§ 47-50-114(b)(1) 14 days after termination§ 47-50-114(b)(c) Mfg acting in bad faith liable for exemplary damages of treble the amount of commissions§ 47-50-114(d) Reasonable attorney’s fees and court costs§ 47-50-114(d) Yes§ 47-50-114(e) No§ 47-50-114(f) Commissions earned after termination must be paid within 14 days§ 47-50-114(b)(c)If action brought by Rep is frivolous mfg can recover attorney fees and court costs47-50-114(d)
Virginia Code of Virginia § 59.1-455 Yes§ 59.1-456 Yes§ 59.1-457 Per contract but not later than 30 days§ 59.1-457 No§ 59.1-458 Post termination commissions must be paid within 30 days§ 59.1-457
Washington Annotated Revised Code of Washington §49.48.150 Yes§49.48.160(1) Yes§49.48.160(1) Per contract but no later than 30 days§49.48.160(3) Yes§49.48.180 No§49.48.160(1)
§49.48.190
All commissions including commissions earned by not due must be paid upon termination§49.48.160
Wisconsin Wisconsin Statute § 134.93 Yes§ 134.93(3) Due upon termination§ 134.93(4) Exemplary damages 200% of the commission owed§ 134.93(5) 90 days written notice of termination must be given to rep§ 134.93(3)

If you are a manufacturer, distributor or importer hiring independent reps, make sure you have a contract that protects you from being sued in 27 other states.

If you are a rep, insist on a contract with every manufacturer you represent.

Either way, you both will be better off.

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