BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1370|
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UNFINISHED BUSINESS
Bill No: SB 1370
Author: Ducheny (D)
Amended: 8/12/10
Vote: 21
SENATE LABOR & INDUST. RELATIONS COMMITTEE : 4-0, 5/3/10
AYES: DeSaulnier, Ducheny, Leno, Yee
NO VOTE RECORDED: Wyland, Hollingsworth
SENATE FLOOR : 22-7, 5/28/10
AYES: Alquist, Calderon, Cedillo, Corbett, DeSaulnier,
Ducheny, Florez, Hancock, Kehoe, Leno, Liu, Lowenthal,
Negrete McLeod, Padilla, Pavley, Price, Romero, Simitian,
Steinberg, Wolk, Wright, Yee
NOES: Ashburn, Dutton, Hollingsworth, Huff, Runner,
Strickland, Wyland
NO VOTE RECORDED: Aanestad, Cogdill, Correa, Cox, Denham,
Harman, Oropeza, Walters, Wiggins, Vacancy, Vacancy
ASSEMBLY FLOOR : 47-27, 8/16/10 - See last page for vote
SUBJECT : Employment contract requirements
SOURCE : Conference of California Bar Associations
DIGEST : This bill requires that all employees who are
paid by commission are provided with a written contract on
the terms and conditions of employment.
Assembly Amendments make clarifying changes, as well as,
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add a due date that requires all employees, by January 1,
2012, to provide a written contract with specified details
to employees who are paid commission.
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:
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.
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This bill requires that all employers provide a written
contract to employees who are paid commission.
Specifically, this bill:
1. Declares legislative intent of the bill, in light of the
specified court decision, to restore the employee
protections that had been in effect by making Sections
2751 and 2752 of the Labor Code apply equally to
employers with a fixed place of business in the state
and to employers who do not have a fixed place of
business in the state.
2. Requires all employers, by January 1, 2012, to provide a
written contract, with specified details, to employees
who are paid commission.
3. Adds when a contract expires and where the parties
continue to work under the terms of the expired
contract, the contract terms are presumed to remain in
full force and effect until the contract is superseded
or employment is terminated by either party.
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) (Unable to reverify)
Conference of California Bar Associations (source)
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
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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.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Carter, Chesbro,
Coto, De La Torre, De Leon, Eng, Evans, Feuer, Fong,
Fuentes, Furutani, Galgiani, Gatto, Hall, Hayashi,
Hernandez, Hill, Huffman, Jones, Lieu, Bonnie Lowenthal,
Ma, Mendoza, Monning, Nava, V. Manuel Perez, Portantino,
Ruskin, Salas, Saldana, Skinner, Solorio, Swanson,
Torlakson, Torres, Torrico, Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Conway, Cook, DeVore, Fuller, Gaines, Garrick, Gilmore,
Hagman, Harkey, Huber, Jeffries, Knight, Logue, Miller,
Nestande, Niello, Nielsen, Norby, Silva, Smyth, Audra
Strickland, Tran, Villines
NO VOTE RECORDED: Bass, Blakeslee, Charles Calderon,
Davis, Fletcher, Vacancy
PQ:mw 8/17/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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