When AB 1396 was signed into law on October 7, 2011, most folks assumed the beginning sentence of the statute meant California’s employer/employee commission-based-pay contract rule would take effect on January 1, 2013. A few argued that the word “by” was ambiguous, so the effective date of the law was unknown. Here’s what the law says:
(a) By January 1, 2013, whenever an employer enters into a contract of employment with an employee for services to be rendered within this state and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid. (Emphasis added.)
Giving the word “by” its ordinary and usual meaning in context as it appears in this piece of legislation suggests lawmakers intended employers to come into compliance by, or no later than, January 1, 2013. The rules of statutory interpretation clearly favor legislators, because the rules provide that a statute cannot reasonably be interpreted in a manner which results in an absurdity. No matter how absurdly said statute may have unintentionally been written.
In this case, an argument that AB 1396 is void for vagueness would not pass the laugh test. Its intended purpose was clearly stated, along with the impetus to the rule, its application, and the means in which it is to be followed. Clearly, its drafters intended for something to happen by January 1, 2013. Most readers would find it logical and reasonable that lawmakers intended for the law to be effective January 1, 2013.
While replacing the word ‘by’ with the word ‘effective’ would have easily eliminated any ambiguity as to the effective date of the rule, such faux pas can reasonably be attributed to a, comparatively speaking, slight legislative oversight. Not to be confused with the Congressional Oversight Committee, which serves another purpose altogether. Enough fun with English for today.
The bottom line is that the rule says commissioned employees are entitled to written contracts with employers, setting out the employers’ methods for computing and paying employees’ commissions. If a commission-based employment contract expires and the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed under the law to remain in full force and effect until the contract is superseded or employment is terminated by either party.
Now is the time to get your commission-based employment contracts drafted, signed, delivered, receipted, and filed away. January 1, 2013 is only a few months away.
If you are an employer facing AB 1396 compliance requirements, consult with legal counsel to ensure your contracts are sufficient or to help you develop a compliance plan. The attorneys at Glass & Goldberg provide high quality, cost-effective legal services and advice for clients in all aspects of business litigation and transactional law. Call us at (818) 888-2220, email us at email@example.com, or visit us on the web at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.