Six things: the rate and what it is a rate of, which revenue counts, when commission is earned, what can be deducted, what happens on separation, and what happens to jobs sold under a previous plan. This is not legal advice. It is the list of decisions an attorney will ask you to make, and making them before you pay for the hour is the point.
Written by JD Davenport, who still sells for a living. Updated 4 November 2026.
Most commission disputes are not arguments about money. They are arguments about a sentence nobody wrote. The rate was agreed in a conversation, the basis was assumed, and the first time a job goes sideways both people are certain and only one of them can be right.
This is not legal advice and this page is not a lawyer. What follows is the list of decisions an attorney will ask you to make. Making them before you pay for the hour is the point.
Rate, and what it is a rate of. Not the percentage. The noun after it. A percentage of the amount sold and a percentage of job profit are different jobs, different behavior and different risk, and a plan that says "20 percent" without finishing the sentence has not said anything.
Commissionable revenue. Which dollars count. Change orders, taxes, financing fees, supplements, deposits that are later refunded. Every one of those has a right answer for your business and no answer that is obvious to both parties.
Earned, and payable. Two different dates and almost nobody separates them. A commission can be earned at signature and payable at collection, and if the document does not say so the rep reasonably believes it is both at once.
Permitted reductions. What can come off a statement and what cannot. This is heavily governed by state wage law and it is the clause most likely to be unenforceable if you write it yourself from what another company does.
Separation. What happens to jobs sold and not yet collected when somebody leaves. Decided in advance it is a policy. Decided on the day it is a negotiation with somebody who has nothing left to lose.
Prior contracts, and what applies from when. A new plan applies to jobs signed on or after a date. It does not reach backwards. Repricing completed work is the fastest way to turn a change people would have accepted into a change people resent, and the difference between those two outcomes is one sentence in this section.
A margin fail-safe.
If commission is a share of the sale, a rep can be paid in full on a job the company lost money on, and the plan worked exactly as written. A fail-safe is the one clause that lets the rate stay simple and predictable while still refusing to pay a full commission on a job that finished under your floor.
Where it is set and how it applies is a business decision with real consequences in both directions. That it should exist is not.
The agreement should say that a statement is issued every cycle, what is on it, and what a rep does when they disagree.
The reason is mechanical rather than legal. If a rep cannot reproduce their own commission from documents they are allowed to see, they are being asked to trust a number. Most will, for a while. The first time a figure comes back lower than expected and nobody can show the arithmetic, you have not had a pay dispute. You have had a trust event, and those cost more and last longer.
Cut every section you do not operate. You will otherwise pay a professional to read clauses you never intend to use, and a document full of mechanisms you do not run is a document nobody on your team can follow either.
Then hand over the list of state-law questions rather than a finished opinion: wage deduction rules, whether commission is a wage after it is earned, final-pay timing, and what a recoverable draw may be recovered from. Those are the four that vary most and the four worth paying for.
Whether a plan is legal in your state is a question for an attorney licensed there, and that is not something this site can answer for you. What can be done without one is getting the document into a shape where the legal questions are few and specific, which is most of what the hour would otherwise be spent on. If you want that done on your own plan rather than from a template, that is one of the five things listed under consulting.
Contract-ready language for every section above, the calculator, the margin fail-safe, the statement template and the rollout plan are The Commission Standard. Whether to pay on revenue or on profit is answered on this page. More answers on the questions page.