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Independent Sales Representatives Rights To Commissions

On Behalf of | Sep 18, 2012 | Employment Law

Independent sales representatives are afforded particular statutory rights in New Hampshire to ensure they receive the commissions they are due. Since these independent sales representatives are not employees of the company of whose product they are selling, they do not have the protections afforded to employees under New Hampshire’s wage and hour law, RSA 275. However, RSA 339-E provides protection for such independent sales representatives and the statute imposes obligations on a company that manufacturers, produces, imports, or distributes a product for sale to customers who purchase the product for resale, uses a sales representative to solicit orders for such product, and compensates individuals who solicit orders in whole or in part by commission. For example, the statute would apply to those individuals who are traditionally considered manufacturer’s reps.

The statute requires the company and sales representative to enter into a written contract for services to be performed within New Hampshire that contains the form of payment and the method by which the payment is computed and paid, the reasonable length of notice which either party must provide to the other for termination of the contract, the number of calendar days up to a maximum of 45 days after the date of termination or notification of death when all commissions due shall be paid, and any other terms and conditions which the parties agree to include in the contract. The company is required to provide the sales representative with a signed copy of the written contract entered into and the contract will be enforced in this state irrespective of whether or not the contract indicates it can be enforced in another state.

Any party who fails to comply with the provisions of the contract as to the payment of commissions is liable in court for damages plus reasonable attorney’s fees and the court may award exemplary damages up to three times the commission owed. Even if the company does not have a place of business in New Hampshire, if it enters into a contract for a sales representative to sell its product in New Hampshire, it is subject to the statute and can be brought into the New Hampshire courts for the statute to be enforced against it. These rights cannot be waived by contract. If the sales representative actually created a corporation or a limited liability company to do its sale business, she or he is no longer an individual and therefore has lost the substantial protections of RSA 339-E. Therefore, an individual sales representative who sells products in this state to resellers should seriously consider the rights she or he is giving up under this statute in deciding to operate as a limited liability company or a corporation.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].