Laws You Should Know
Independent Wholesale Representatives Laws (Civil Code §1732.10) (“Independent contractors Fight Back”)
A little known section of the Civil Code, §1738.10, et seq., is the “Independent Wholesale Representatives Contractual Relations Act.” These laws are to protect commission based independent contractors in an industry where handshakes predominantly rule.
This law pertains to outside sales persons, or independent wholesale sales representatives who typically work on a commission and wholesale manufacturers and distributors. This law is unique in that it both requires a written agreement, but also protects a sales person when there is no written agreement. A basic requirement is that distributors or manufacturers must include a written statement identifying the method of calculating the commission with each commission check paid to the salesperson.
Under Section 1738.15, a wholesale distributor or manufacturer may be punished by owing treble damages if it “willfully fails to enter into a written contract as required by [Section 1738.13] or willfully fails to pay commissions as provided by the written contract . . .” Attorney’s fees may also be awarded even if not in the written agreement between the parties. Violations of Section 1738.13 may also be a basis for a civil action under Section 1738.15 after the outside sales person is terminated.
These actions can be essentially slam dunk, so clear written agreements and calculations of commissions due are mandatory or you will be making both plaintiff and defense attorneys very wealthy with these cases.