BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2675|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 2675
Author: Swanson (D)
Amended: 8/15/12 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SUBJECT : Commission pay plans
SOURCE : California New Car Dealers Association
DIGEST : This bill specifies that short-term bonuses and
temporary incentives are not included under the definition
of commission, therefore not requiring the employer to
provide a new written contract every time the employer
provides a short-term bonus or incentive to their
employees.
Senate Floor Amendments of 8/15/12 (1) strike all the
contents of the bill in their entirety and instead address
commission based employment contracts. These amendments
simply add clarity to what is not included in the meaning
of "commission" for the payment to employees of work
rendered; and (2) strike out the current author, Committee
on Labor and Employment, and replace it with Assembly
Member Swanson.
ANALYSIS : Existing 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
CONTINUED
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proportionately upon the amount or value thereof. (Labor
Code Section 204.1)
Existing law requires that all employers provide a written
contract on the terms and conditions of employment to
employees who are paid on commission.
This bill specifies that short-term bonuses and temporary
incentives are not included under the definition of
"commission," therefore not requiring the employer to
provide a new written contract every time the employer
provides a short-term bonus or incentive to their
employees.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/16/12)
California New Car Dealers Association
ARGUMENTS IN SUPPORT : According to the author's office,
last year, AB 1396 (Assembly Labor Committee) amended Labor
Code Section 2751 to require commission pay plans to be in
writing. That requirement goes into effect on January 1,
2013.
Since the enactment of AB 1396, the California New Car
Dealers Association has expressed concern regarding certain
short-term incentives offered to car dealers.
For example, on a given day, a car dealership may offer a
special incentive - such as "$500 to the first person to
sell that yellow car we have had on the lot for three
months."
The Association expressed concern that it would be
burdensome for them to have to issue a new written
commission plan each and every time such a special
incentive is offered.
Therefore, this bill clarifies that such temporary and
variable incentive payments, which increase (but do not
decrease) payments, are not considered "commissions" for
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the limited purpose of the writing requirement of Labor
Code Section 2751. Therefore, an employer will not have to
issue a new written commission plan every time such a
short-term incentive is offered.
PQ:m 8/17/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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