Governor Signs Bill Imposing New Requirements On In-State And Out-of-State Employers Who Pay Commissions

Two score and eight years ago, the California legislature enacted AB 836 (Frew), Stats. 1963, ch. 1088. That legislation requires employers who pay their employees for services in California through commissions to provide those employees with a written contract setting forth the manner in which commissions are computed and paid. Labor Code § 2751. Violators face treble damages. Labor Code § 2752. The most interesting feature of these statutes, however, is the fact that they apply only to employers with “no permanent and fixed place of business” in California.

Constitutional Problems

Thirty six years after the AB 836 was enacted, a Nevada corporation with its principal place of business in Texas decided to challenge the constitutionality of the legislation. In Lett v. Paymentech, Inc., 81 F. Supp.2d 992 (N.D. Cal. 1999), U.S. District Court Judge Jenkins found that both Labor Code sections violated the Commerce Clause and the Equal Protection Clause of the U.S. Constitution. Despite this holding, the two statutes remained in the code books for another decade.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen Matkins Leck Gamble Mallory & Natsis LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.