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)
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|COMMITTEE VOTE: |7-0 |(August 28, 2012) |RECOMMENDATION: |concur |
|(L. & E.) | | | | |
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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)Requires, beginning January 1, 2013, 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.
AB 2675
Page 2
FISCAL EFFECT : Unknown
COMMENTS : Last year, AB 1396 (Labor and Employment Committee),
Chapter 556, Statutes of 2011, was enacted to require all
employers, by January 1, 2013, to provide a written 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: 0005742