BILL ANALYSIS Ó
AB 2675
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2675 (Swanson)
As Amended August 15, 2012
Majority vote
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|ASSEMBLY: | |(May 10, 2012) |SENATE: |34-0 |(August 23, |
| | | | | |2012) |
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(vote not relevant)
Original Committee Reference: L. & E.
SUMMARY : Clarifies provisions of law related to written
commission pay plans.
The Senate amendments delete the contents of the bill and
instead:
1)Provide that, for purposes of the requirement that commission
pay plans must be in writing, "commissions" does not include
temporary, variable incentive payments that increase, but do
not decrease, commissions paid under the written contract.
2)Make other technical and conforming changes to existing law.
EXISTING LAW :
1)Beginning January 1, 2013, requires commission pay contracts
to be in writing and set forth the method by which the
commissions shall be computed and paid.
2)Provides that, for purposes of this writing requirement,
"commissions" does not include short-term productivity bonuses
or bonus and profit-sharing plans, as specified.
AS PASSED BY THE ASSEMBLY , this bill clarified that portions of
payments withheld to satisfy civil wage and penalty assessments
are deemed forfeited upon receipt of a final order that is no
longer subject to judicial review.
FISCAL EFFECT : Unknown
COMMENTS : Last year, AB 1396 (Labor Committee) was enacted to
require all employers, by January 1, 2013, to provide a written
AB 2675
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contract, with specified details, to employees who are paid
commission. The law excludes from this writing requirement
specified short-term productivity bonuses or bonus and
profit-sharing plans.
Since the enactment of the legislation last year, the California
New Car Dealers Association has expressed concern regarding
certain temporary incentives offered to employees of car
dealers. They 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, based on discussions and agreement with the sponsor
of last year's bill, the amendments to this bill clarify that
such temporary and variable incentive payments, which increase
(but do not decrease) payments, are not considered "commissions"
for 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.
This is consistent with other provisions of Labor Code Section
2751 that already exclude certain short-term productivity
bonuses and bonus and profit-sharing plans.
Since the provisions of AB 1396 do not take effect until January
2013, addressing this issue in this bill will address the
concerns of the California New Car Dealers Association before
the writing requirement goes into effect.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0005271