You need to make sure you understand the law if you are a manufacturer or an independent sales representative. For this chart, the following definitions shall apply.

The Headings used are defined or explained as:

State: This is the state where the law is applicable. Most of the statutes, however, say that a rep can sue for unpaid commissions in this state for money owed by the manufacturer in other states. Eleven states require a written contract between the Mfg. and the Rep. Three states probably require a written contract between a Mfg. and Rep. All states say that a request to pay a person a commission for a sale is a contract.

Statute Name & Number: This is the name of the statute and number of the statute. This is always linked to the statute.

K Required: This means the burden is on the Manufacturer to create a written contract. Many of the statutes require not only a signature of both parties but proof in the form of a receipt that the rep has received a copy of the contract.

Written K Controls (except non-payment issues): If there is a dispute or the written contract is different from the statute the written contract controls the payment of commissions upon termination.

Other K Requirements: Any special or unique issues in the statute that may be of importance.

Pay upon Termination: This is what the statute requires as far as commissions paid upon termination of the contract with the Rep.

Damages: If the Rep is not paid as per the contract or the statute, this sets forth the damages that a rep can recover for non-payment. Most states this is a factor of the commissions owed, which can be as much as four times the commissions owed. Iowa, Michigan, Minnesota and Missouri have more complicated ways of determining damages based upon the time until paid or other ways to calculate the damages.

Most states allow a rep, if successful in a suit to recover unpaid commission’s damages in excess of the commissions owed. In several cases that amount totals four times the commissions owed. If the rep is successful in recovering damages, the rep can also recover attorney fees and court costs.

Eight states allow the Mfg. to recover attorney fees and court costs if the lawsuit filed by the Rep was frivolous. Frivolous in a legal context means there was no basis for the suit. Have a claim and losing it for some reason, is not frivolous.

Most states require commissions that were earned but not due until after the termination of the Contact between the Mfg., and the Rep must be paid to the Rep.

Court Costs & Atty Fees: Either the Rep or in a few cases, the Prevailing party (winner) can recover court costs and attorney’s fees if they successfully sue for unpaid commissions.

Suit brought in a state of Rep Choice: This statute states that even though the Mfg. may not have a business location within the state, which would normally be needed to establish venue and jurisdiction over the manufacturer, the statute provides the necessary venue and jurisdiction. That means the manufacturer can be brought to suit in that state.

K can waive the statute: This means that a contract between the Rep and the Mfg. cannot waive parts of the statute, specifically the requirement on how commissions are to be paid on termination, damages, attorney fees and costs and whether and jurisdiction and venue are established.

Misc.: More unique or important sections of the statute you should know about.

This information is here as a starting point. Contact your attorney for additional information.

Click here to download a copy of this chart

27 state laws and short interpretations are listed below.

If you are a manufacturer, distributor or importer hiring independent reps, make sure you have a contract that protects you from being sued in 27 other states.

If you are a rep, insist on a contract with every manufacturer you represent.

Either way, you both will be better off.

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