Protecting Both Business Finances And Futures

Dealership owners need airtight contracts with their sales teams

On Behalf of | Jul 22, 2022 | Auto Dealership Law |

Privately held auto dealerships in Orange County want to take good care of their sales teams. Salespeople who are happy and productive will no doubt produce more revenue for the auto dealership since they will have incentives to sell more cars.

On the other hand, the dealership also has to protect its own business interests.

When bringing on a new sales member, it is important to be sure that any employment contract covers all essential points required under California and also spells out the rights and responsibilities of both sides.

Having a legal professional help the dealership with this process can both protect the dealership and retain a quality sales force.

An employment contract will clearly address a salesperson’s commission

Although it is not required, an industry standard in auto sales is for salespeople to get paid on commission. In California, commission agreements have to be in writing and signed in some fashion by both the employer and the employee.

At a minimum, the agreement needs to cover how the commission gets calculated and whether and how the dealership will deduct amounts, including advances, from the commission.

A dealership must also be sure that their commission agreement complies with California’s many statutes, regulations and court cases designed to protect the workers of this state.

Otherwise, a court may decline to enforce the agreement or may interpret it in a way that strongly, and possibly unfairly, favors the employee.

To give a common example, commission agreements have to follow California’s minimum wage and overtime rules. These rules apply to many if not most automobile salespeople.

Employment contracts should also address other issues

A dealership may or may not offer additional terms in a contract with its salespeople. However, if it chooses to do so, it will want to be sure to address other common issues, such as the protection of customer lists and other confidential information, performance expectations and the like.



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