Unpaid Commissions for Independent Sales Reps in California: Civil Code Section 1738.10 and Treble Damages

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

California protects independent sales reps through the Independent Wholesale Sales Representatives Contractual Relations Act, which begins at Civil Code section 1738.10. It requires manufacturers, jobbers, and distributors to give commissioned reps a written contract. Willfully failing to provide it, or to pay commissions under it, trebles damages. A rep cut off before a large order pays can often recover commissions on sales the rep procured, depending on the contract. The prevailing party recovers attorney fees. Kolmogorov Law, P.C. represents reps and manufacturers in Orange County, Los Angeles, and across California.

Call (909) 235-6116 or contact us online to discuss unpaid commissions, or a commission claim against your company.

Who the Act covers

The statute protects a "wholesale sales representative." That is a person who contracts with a manufacturer, jobber, or distributor to solicit wholesale orders and is paid, in whole or in part, by commission. Two groups are carved out: someone who buys exclusively for their own account for resale, and someone who sells or takes orders for direct sale to the ultimate consumer. (Civ. Code, § 1738.12, subd. (e).)

The company side is defined broadly. A manufacturer is any organization that produces, assembles, imports, or otherwise fabricates a product, tangible or intangible, intended for resale to or use by California consumers. Jobbers and distributors are covered as well. (Civ. Code, § 1738.12, subds. (a)-(c).) An importer that never builds anything is still a "manufacturer" under that wording.

Two limits are worth knowing. The Act applies to a rep who is not an employee. And it does not apply to persons licensed under the alcoholic beverage laws in Division 9 of the Business and Professions Code. (Civ. Code, §§ 1738.13, subd. (a), 1738.17.)

The written contract the statute requires

A company doing business in California that uses an independent rep to solicit wholesale orders at least partly in this state, on commission, must enter into a written contract with the rep. The contract has to state five things:

The rate and method by which the commission is computed.
The time when commissions will be paid.
The assigned territory.
All exceptions to the territory and the customers in it.
What chargebacks, if any, will be made against commissions.

Each side must receive a signed copy, and the rep signs a receipt. With every commission payment, the company must also give the rep a written accounting of the orders paid, with customer names and invoice numbers, the commission rate on each order, and any chargebacks. A contract term waiving these rights is void. (Civ. Code, § 1738.13.)

In my experience the accounting requirement is the one companies skip. A check with no backup is common, and it leaves the rep unable to tell which house accounts and chargebacks were applied.

Treble damages and what "willful" means

A manufacturer, jobber, or distributor that willfully fails to enter into the required written contract, or willfully fails to pay commissions as the written contract provides, is liable for treble the damages proved at trial. (Civ. Code, § 1738.15.)

Willful does not mean malicious. The Court of Appeal has read it in the ordinary civil sense: the company intentionally did or failed to do the act. The rep does not have to prove the company knew what the Act required. A good-faith, reasonable belief that the statute did not apply, or that a legal defense excused payment, can negate willfulness. (Baker v. American Horticulture Supply, Inc. (2010) 186 Cal.App.4th 1059, 1074-1076.) The same decision held that a rep who proves a violation that was not willful may still recover ordinary damages under the Act. (Id. at p. 1073.)

Fees follow the result. In an action brought by the rep under the Act, the prevailing party is entitled to reasonable attorney fees and costs. (Civ. Code, § 1738.16.) That cuts both ways, and a rep who files a weak statutory claim risks paying the company's fees.

Commissions on orders that pay after termination

This is the dispute behind most calls. The rep spends a year opening an account, the purchase order finally arrives, and the termination letter arrives a week before it.

California's rule is old and favorable to the rep. Where the contract contemplates commissions on sales the agent procured, the agent is entitled to the commission even though the principal completes the sale after the agency ends. The California Supreme Court applied that rule to hold that termination did not defeat commissions on sales the agent had obtained. (Zinn v. Ex-Cell-O Corp. (1944) 24 Cal.2d 290, 296-297.)

The rule yields to the contract. Many agreements define when a commission is "earned" (on order, shipment, or customer payment) and cut off commissions a set number of days after termination. Read those clauses first. Where the timing of a termination looks designed to capture a commission, the implied covenant of good faith may also be in play. If no enforceable contract fixes the rate, quantum meruit is the fallback.

If you are the sales representative

Build the file before you send a demand. Collect the contract or the emails that set the rate, your order and pipeline records, and every commission statement. List the accounts you opened and the orders pending on the day you were terminated.

Ask in writing for the accounting the statute requires. If the company will not provide it, a claim for an accounting can force the sales data into the open. Do not wait long, because limitations periods differ for the contract and statutory claims.

If you are the manufacturer or distributor

The cheapest fix is a compliant contract signed now, with the five required terms and a clear definition of when commissions are earned and what happens after termination. Send the itemized statement with every payment.

An out-of-state company is not insulated. A nonresident that enters into a contract regulated by the Act is deemed to be doing business in California for purposes of personal jurisdiction. (Civ. Code, § 1738.14.)

Confirm the relationship is what you think it is. A commissioned employee is covered by a different statute, which requires a written commission contract and a signed receipt. (Lab. Code, § 2751.) Our page on independent contractor misclassification explains that line. A reseller that buys exclusively for its own account is outside the Act; see distribution agreement termination.

What to bring to the first meeting

The rep agreement, or the emails and texts that set the commission terms.
Commission statements, checks, and any chargeback notices.
Purchase orders and invoices for the disputed accounts.
The termination letter and anything said about pending orders.
A list of the customers you brought in, with dates.

Frequently asked questions

I am an independent sales rep and the manufacturer cut me off right before a big order paid out. Can I recover those commissions in California?

Often yes. California follows the procuring cause rule: if your contract pays commissions on sales you procured, termination before the order ships or pays does not by itself defeat the commission. The contract may limit post-termination commissions, so its wording controls. If the manufacturer willfully failed to give you the written contract Civil Code section 1738.13 requires, treble damages may be available.

What is California Civil Code section 1738.10?

It is the opening section of the Independent Wholesale Sales Representatives Contractual Relations Act. The Act requires manufacturers, jobbers, and distributors doing business in California to give commissioned independent reps a written contract with specified terms, and an itemized statement with each payment. A willful failure to enter into the contract or to pay commissions under it exposes the company to treble damages, and the prevailing party recovers attorney fees.

Does the manufacturer have to give an independent sales rep a written contract in California?

Yes, when the rep is not an employee, solicits wholesale orders at least partly in California, and is paid by commission. Civil Code section 1738.13 requires the contract to state the commission rate and method, payment timing, territory, territory exceptions, and chargebacks. The rep must receive a signed copy, and the requirement cannot be waived.

When are treble damages available for unpaid sales commissions in California?

Under Civil Code section 1738.15, when a manufacturer, jobber, or distributor willfully fails to enter into the required written contract or willfully fails to pay commissions as that contract provides. Courts read "willfully" as intentionally, and a reasonable good-faith belief that payment was not owed can defeat trebling. Ordinary damages remain available.

Our company terminated an outside rep and he now demands commissions on every future order from his accounts. Do we owe them?

It depends on your agreement and on which orders he procured. California law protects commissions on sales a rep procured before termination, but it does not create a perpetual right to commissions on an account unless the contract says so. A written agreement that defines when commissions are earned usually decides the dispute.

Talk to a California breach of contract attorney

If you are owed commissions, or your company has received a commission demand, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located at 327 Magnet, Irvine, CA 92618, and represents sales representatives and businesses in Orange County, Los Angeles, and throughout California.

This page provides general information about California law and is not legal advice. Outcomes depend on the contract, the sales records, and the court.