Fall 2010 issue of Horizons

• “Minis,” or a flat amount paid when the commission is low—most are $100 • “Spiffs,” or cash incentives for various achievements • Bonuses to top seller and/or top gross seller of the month • Guaranteed minimum per week ($150) Be Careful How You Draft Pay Plans In addition to ensuring they have the most innovative compensation plans, dealers need to also be concerned that the pay plans are written in a manner that protects the dealership from unexpected liabilities and other wage actions. Ward’s Dealer Business reports that a pay plan should not be a binding contract, and if it is not carefully written, it could be construed as such. For example, if the plan contains guarantees for a period of time (minimum earnings for 90 days), it could give one the opportunity to claim guaranteed employment for that time.

Ward’s further reports that every pay plan should contain these three written components: • The plan is nothing more than a description of

how the salesperson will be paid. • This pay plan is not a contract.

• In applicable states (Missouri included), it does not affect the “at will” status of the employee; either party may terminate employment at any time.

Sales Wages Fall Annual Mean Wage For Auto Salesperson 2003: $43,520 2006: $44,170 2009: $42,970

Source: U.S. Bureau of Labor Statistics

For more information on ways RubinBrown can assist you with your compensation plans, please contact us.

RubinBrown’s Automotive Services Group

Mary Ramm, CPA Partner

John Butler, CPA Partner-In-Charge Automotive Services Group john.butler@rubinbrown.com 314.290.3333

Tax Consulting Services Group mary.ramm@rubinbrown.com 913.491.4406

Russ White, CPA, MBA Partner Assurance Services Group russ.white@rubinbrown.com 303.698.1883

Mark Conrad, CPA Manager Automotive Services Group mark.conrad@rubinbrown.com 314.290.3425

www.rubinbrown.com

32