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Sales Employment Checklist
| COMPENSATION | |
| Salary (usually given to company-employed salespeople) | |
| What is the amount and when is it payable? | |
| Draw (usually given to independent sales reps) | |
| Is it applied against commission? | |
| What is the amount and when is it payable? | |
| The draw can be stopped by the company any time without prior notice when commission earnings do not exceed draw. | |
| The sales rep is personally liable for repayment when draw exceeds commission earnings or when the rep is fired from his job. | |
| The company has the right to set off draw and reduce the amount of commission owed upon termination of the employment relationship. | |
| Bonus (usually given to company-employed salespeople) | |
| Is the bonus gratuitous or enforceable by contract? | |
| What is the amount and when is it payable? | |
| Specify that prorated bonuses will not be given in the event the salesperson resigns or is fired prior to the date when the bonus will be paid. Avoid basing the bonus on a determination of profits because this may give the salesperson the right to inspect your company's books and records. | |
| COMMISSION | |
| Specify the commission rate and when it is payable. | |
| Avoid guaranteed shipping arrangements. | |
| Specify split commission policies if applicable. | |
| Specify all deductions from commission, how and when they are computed? e.g., returns, freight charges, unauthorized price concessions given by the salesperson, billing and advertising discounts, collection charges, failure of the customer to pay. | |
| Specify commission for large orders, special customers, off-price goods, and reorders. | |
| Expenses (usually for company-employed salespeople) | |
| Specify the kind and amount of expenses that are reimbursable. | |
| Specify the kind of documentation the salesperson must supply in order to receive reimbursement. | |
| TERRITORY | |
| Are you giving exclusive or non-exclusive territorial rights? Define the particular territory and customers. | |
| Be sure to discuss all house accounts and document these in writing. | |
| What about products sold in one territory and shipped into another? Determine how this will affect your split commission policy. | |
| Can the salesperson sell in other territories not solicited by other salespeople, e.g., at trade shows? | |
| If exclusive territorial rights are not involved, insure that the salesperson will not receive commission for orders not actually solicited by him. | |
| DUTIES | |
| Exercise best efforts in representing the company and its products or services. | |
| Make no representations, warranties, or commitments binding that company without the company's prior consent. | |
| The salesperson will be personally liable and required to reimburse the company in the event he exceeds his authority. | |
| Forward all field inquiries or complaints in the field to the company immediately. | |
| Must work full-time for the company without any sideline. Especially, must not represent or form a competing business. | |
| Must personally solicit the product and cannot hire an associate to represent the company without prior written approval. | |
| Maintain minimum general and automobile liability coverage in excess of $___ per occurrence. | |
| Attend sales meetings, both local and national. | |
| Call on accounts periodically, service accounts, and maintain accurate selling records and lead sheets. | |
| Assist in any collection efforts requested by the company. | |
| Promise to protect all trade secrets, customer lists, and other forms of confidential information acquired while working for the company. | |
| LENGTH OF EMPLOYMENT | |
| Length of employment. Is employment at-will (the salesperson can be fired any time) or for a definite term, say two years? | |
| If employment is at-will, is notice required? | |
| If so, when must it be sent for the termination to be effective and how must it be sent (e.g., certified or regular mail?) | |
| Never give assurance of job security if you are hiring a salesperson at-will. | |
| If employment is for a definite term, is the contract renewed under the same terms and conditions after the expiration of the original agreement? Must notice be sent to confirm this? | |
| Peg employment to a minimum sales quota if applicable. | |
| TERMINATION | |
| Clarify when commissions stop: e.g., upon termination, upon shipment of an order, upon shipment with a final cut-off date, to eliminate the problem with reorders. | |
| Avoid severance compensation arrangements. | |
| Specify when a final accounting will be made. | |
| Limit the right of the salesperson to sue for commission within a specific period. | |
| Specify the prompt return of all samples, customer lists, orders, field information, with a penalty if not complied with. | |
| Include a restrictive covenant for additional protection in writing. | |
Copyright 1995 Steven M. Sack
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