Pennsylvania Sales Representatives’ Commissions Statutes

Independent manufacturers’ sales representatives are typically hired by manufacturers, distributors, and importers to solicit orders for their products from potential customers in designated territories in exchange for a sales commission. Such sales representatives often spend many months or years building up a customer base in their assigned territory and incur substantial up-front sales and marketing expenses that can include travel, lodging, entertainment, and trade show expenses with the hope of generating a stream of future commission income. The sales representative is vulnerable if the principal suddenly terminates their relationship and/or fails to pay all commissions owed to the sales rep.

In response to these concerns, starting in the 1980s and 1990s, many states enacted statutes to protect the interests of these independent manufacturers’ sales representatives. These statutes often:

• Require the sales representative agreement to be in writing;

• Require the principal to provide a copy of the written contract to the sales rep;

• Require the principal to pay the sales rep for all commissions owed promptly following termination (or incur liability for statutory penalties, attorney’s fees, and court costs);

• Strictly limit the circumstances under which the principal can terminate, or fail to renew, a sales representative agreement (e.g., requiring the manufacturer to have “good cause” for termination); and/or

• Prohibit the principal from imposing terms (such as choice of law or exclusive venue provisions) in the sales rep agreement that would effectively require the sales rep to waive its statutory protections under the law.

Thirty-five of the fifty states have enacted some form of sales rep protection legislation.

This article sets forth the text of Pennsylvania’s laws protecting independent manufacturers’ sales representatives, as of January 1, 2023.

The Pennsylvania Commissioned Sales Representatives Act

Pennsylvania Statutes, 43 P.S. § 1471

The following words and phrases when used in this act shall have the meanings given to them in this section unless the context clearly indicates otherwise:

“Commission.” Compensation accruing to a sales representative for payment by a principal, the rate of which is expressed as a percentage of the dollar of orders or sales.

“Principal.” Any person who does all of the following:

(1) Engages in the business of manufacturing, producing, importing or distributing a product for sale to customers who purchase such products for resale.

(2) Utilizes sales representatives to solicit orders for such product.

(3) Compensates sales representatives, in whole or in part, by commission.

“Sales representative.” A person who contracts with a principal to solicit wholesale orders from retailers rather than consumers and who is compensated, in whole or in part, by commission. The term does not include one who places orders or purchases for his own account for resale or one who is an employee of a principal.

“Termination.” The end of services performed by the sales representative for the principal. The term includes any action that concludes the relationship of the parties.

Pennsylvania Statutes, 43 P.S. § 1472

(a) Contents.–When a sales representative enters into an agreement with the principal for the solicitation of wholesale orders, a written contract shall be entered into setting forth the following:

(1) The form of payment and the method by which it is to be computed and made.

(2) A specified period for the performance of services.

(3) The manner and extent to which job-incurred expenses are to be reimbursed.

(4) A specified geographical territory or specified accounts.

(b) Copy of contract.–The principal shall provide each sales representative with a signed copy of the contract.

Pennsylvania Statutes, 43 P.S. § 1473

A principal shall pay a sales representative all commission due at the time of termination within 14 days after termination.

Pennsylvania Statutes, 43 P.S. § 1474

A principal shall pay a sales representative all commissions that become due after termination within 14 days of the date such commissions become due.

Pennsylvania Statutes, 43 P.S. § 1475

(a) General.–A principal who willfully fails to comply with the provisions of section 3 or 41 shall be liable to the sales representative in a civil action for:

(1) All commissions due the sales representative, plus exemplary damages in an amount not to exceed two times the commissions due the sales representative.

(2) The cost of the suit, including reasonable attorney fees.

(b) Frivolous actions.–If judgment is entered for the principal and the court determines that the action was brought on frivolous grounds, the court shall award reasonable attorney fees and court costs to the principal.

Pennsylvania Statutes, 43 P.S. § 1475.1

(a) Contract.–The terms of the contract, whether or not in writing, between the principal and sales representative shall determine when commissions become due.

(b) Custom and usage.–If the time when commissions become due cannot be determined by a contract between the principal and sales representative, the past practices of the parties shall control, or, if there are no past practices, the custom and usage prevalent in this Commonwealth for the business that is the subject of the relationship between the parties shall control.

Pennsylvania Statutes, 43 P.S. § 1476

Nothing in this act shall invalidate or restrict any other or additional right or remedy available to sales representatives or preclude sales representatives from seeking to recover in one action on all claims against a principal. The provisions of this act may not be waived. In applying the provisions of this act, the courts of this Commonwealth shall not recognize any purported waiver of the provisions of this act, whether by express waiver or by attempt to make a contract or agreement subject to the laws of another state.

Pennsylvania Statutes, 43 P.S. § 1477

The provisions of this act shall apply to existing contracts which can be terminated at will and to contracts entered into or renewed after the effective date of this act. Nothing contained in this section is intended to violate section 17 of Article I of the Constitution of Pennsylvania, relative to impairing the obligations of contracts.

Pennsylvania Statutes, 43 P.S. § 1478

Within 180 days after the effective date of this act, all contracts described in section 7 shall comply with the provisions of section 2.

Conclusion

Pennsylvania, like a majority of states, has enacted sales representative legislation. Manufacturers, distributors, and importers typically bear the burden of compliance with these statutes and should ensure that their contracts and activities are consistent with applicable law. Sales representatives may wish to review applicable laws to understand their rights. If the laws of multiple states are involved, compliance with the relevant law may become even more complicated, and legal advice from a Pennsylvania sales rep attorney may be appropriate.

If you are interested in the sales representative statutes of other states, click here to view our sales representative statute survey page.

______________

About the Author

Craig W. Trepanier is a sales representative attorney who handles disputes under the Minnesota Termination of Sales Representatives Act and the laws of other jurisdictions. He can be reached at craig@trepanierlaw.com or at 612.455.0502. Trepanier MacGillis Battina P.A. is a Minnesota sales representative law firm located in Minneapolis. If you need advice regarding your sales representative agreement, or are having a dispute regarding the termination, non-renewal, or modification of a sales rep agreement or unpaid commissions, please contact us. Mr. Trepanier can represent you in the State of Minnesota. If appropriate, we can co-counsel with an attorney in your jurisdiction to leverage our specialized knowledge of sales rep law.