BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  SB 1370|
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                                 THIRD READING


          Bill No:  SB 1370
          Author:   Ducheny (D)
          Amended:  As introduced
          Vote:     21

           
           SENATE LABOR & INDUST. RELATIONS COMMITTEE :  4-0, 5/3/10
          AYES:  DeSaulnier, Ducheny, Leno, Yee
          NO VOTE RECORDED:  Wyland, Hollingsworth


           SUBJECT  :    Employment contract requirements

           SOURCE  :     Conference of California Bar Associations


           DIGEST  :    This bill requires that employees who are paid  
          by commission are provided with a written contract on the  
          terms and conditions of employment.

           ANALYSIS  :    Existing law and case law defines a commission  
          as compensation paid to any person for services rendered in  
          the sale of such employer's property or services and based  
          proportionately upon the amount or value thereof.

          Existing law defines a contract of employment as a contract  
          by which one an employer engages an employee to do  
          something for the benefit of the employer or a third  
          person.

          Existing law requires a written contract of employment if  
          the following conditions are met: 

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          1. The employer has no permanent and fixed place of  
             business in California.

          2. The employer in entering into a contract of employment  
             with an employee for services to be rendered within  
             California.

          3. The contemplated method of payment of the employee  
             involves commissions, unless excluded. 

          Under these conditions, the contract must be in writing and  
          must set forth the method by which the commissions shall be  
          computed and paid.
          The commissions excluded are:

          1. Short-term productivity bonuses such as are paid to  
             retail clerks.

          2. Or, bonus and profit-sharing plans, unless there has  
             been an offer by the employer to pay a fixed percentage  
             of sales or profits as compensation for work to be  
             performed.

          Existing law holds any employer who fails to contract with  
          an employee as required to be liable to the employee in a  
          civil action for triple damages.

          This bill extends the conditions necessitating a written  
          contract of employment to all employers in the State of  
          California.

           Prior Legislation

           AB 836 (Frew), Chapter 1088, Statutes of 1963, requires  
          that out-of-state employers provide a written contract  
          under the conditions discussed above, as well as creates a  
          penalty for failing to provide such a written contract. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  5/3/10)

          Conference of California Bar Associations (source)







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          California Employment Lawyers Association
          California Labor Federation
          California State Pipe Trades Council
          Consumer Attorneys of California
          State Association of Electrical Workers
          Western State Council of Sheet Metal Workers


           ARGUMENTS IN SUPPORT  :    Proponents argue that requiring  
          written contracts in the specific instance of  
          commission-based compensation employment provides clarity  
          and protection to both the employer and the employee.  By  
          prohibiting oral contracts and requiring that a  
          commission-based work contract be clearly written, the  
          proponents believe that this bill lessens the probability  
          of unnecessary litigation, as well as ensures that the  
          existing law, which is completely unenforceable, does not  
          provide a "trap for the unwary" and cast the illusion of  
          protection, rather than actually provide it.


          PQ:mw  5/4/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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