Commission Agreement

Commission Agreement
This Agreement is provided to create a shared understanding of how the commission plan works at Nordstrom.
For purposes of the Agreement, the term “salesperson” refers to an employee who is paid commissions.
Commissions are designed to compensate the salesperson for all time spent on selling and activities that
support the selling process even if there are no customers present.
When Commissions Are Earned
•Each pay period, including the final pay period of employment, Nordstrom advances commissions to
salespeople based on net sales as defined below.
•Commissions are considered earned, and no longer advanced, after the customer has kept merchandise for
more than one year from the date of purchase or exchange.
•If merchandise for which a salesperson was advanced commissions is returned by the customer for any
reason within one year of the date of the purchase or exchange, those returns will be included in the
salesperson’s net sales calculation.
Net Sales
•Net sales is the difference between a salesperson’s total sales and a salesperson’s total returns, at each
commission percentage, that have been audited and received by Payroll by the close of the pay period.
•A return is included in the net sales calculation when the merchandise is returned by the customer for any
reason within one year of the date of the purchase or exchange. (There is an exception to this approach for
Fine Jewelry diamond upgrades. See your Fine Jewelry department manager or Human Resources about
how diamond upgrades are handled.)
•Returns are included in the net sales calculation at the same commission percentage as the percentage in
effect on the date of the sale or exchange transaction.
Commission Calculation
Once net sales have been determined, Nordstrom calculates and advances commissions as follows:
•First, each of the salesperson’s net sales calculations is multiplied by the applicable commission percentage
to calculate commissions.
•Then, the commissions at each commission percentage are added together to determine the salesperson’s
Commission Sub-Total.
•If the Commission Sub-Total is negative due to returns exceeding sales for the pay period, the negative
balance (referred to as Held Net Balance) is held and applied against future commission advances for up to
four pay periods. (The Held Net Balance is held for eight pay periods in states where Nordstrom pays weekly.)
•If the Commission Sub-Total is positive, the salesperson is advanced the difference between their Commission
Sub-Total and Held Net Balance.
Misdraw
Some salespeople are on a draw commission pay plan. Under this plan, Nordstrom compares a salesperson’s
advanced commissions to their guaranteed minimum selling rate (also called “draw”) each pay period.
•If the salesperson’s advanced commissions do not meet or exceed the guaranteed minimum draw for the pay
period, the salesperson will be advanced their commissions, plus an additional amount necessary to bring
the total selling compensation up to their guaranteed minimum draw.
• This additional amount is shown as Misdraw on the salesperson’s payslip.
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Salespeople on an hourly plus commission or salary plus commission pay plan are not eligible for Misdraw.
Nordstrom will pay these salespeople their fixed hourly pay rate or salary, plus advanced commissions based
on their net sales each pay period.
Overtime for Commissioned Sales Employees
The overtime rate for salespeople is calculated in one of two ways: it is either calculated based on their Base
rate or their Regular rate (which Nordstrom refers to as the CORE rate).
•When hired as a non-exempt commissioned employee, a salesperson is paid overtime at the CORE rate for
the first three pay periods.
•In most states, after the first three pay periods, the salesperson is paid overtime using the Base rate if the
salesperson’s wages meet specific criteria, including, but not limited to the following:
1. T
he salesperson’s advanced commissions for the prior six months (or, if employed less than six months,
their cumulative commissions since the date of hire) are more than half their total compensation, and
2. The salesperson’s total compensation is more than 1.5 times minimum wage for every hour worked.
•During the first six months of employment, Nordstrom determines the appropriate rate for overtime each
pay period. After this period of time, Nordstrom determines the appropriate rate for overtime on a quarterly
basis. A salesperson is paid overtime based on the CORE rate if their pay does not meet the criteria
described above during the representative period. Nordstrom determines whether the salesperson earned
more than one-half of their compensation in commissions over a six-month period, because that period
represents the salesperson’s sales pattern taking into account seasonal fluctuations and sale periods.
Reporting of Commissions
Each salesperson has access to “My Commissions Information” which accompanies the payslip and shows
the salesperson’s:
• Commission advances for the pay period.
• Net sales calculation at each commission percentage.
• Held Net Balance.
Non-Commissionable Sales
The following transactions are not eligible for commission advances:
•Sales to other employees or eligible family members placed on-line through Nordstrom Direct where the
merchandise discount is applied.
• International sales sent through a Nordstrom third-party shipper.
•Sales on non-commissionable merchandise departments such as Restaurant retail products, purchase with
purchase promotions, Rack or NQC (Nordstrom Quality Center) merchandise and deposits on special orders.
• Sales of gift cards or gift certificates
When Your Employment with Nordstrom Ends
•In most states, including New York, if a salesperson’s employment with Nordstrom ends prior to the last
day of a pay period, Nordstrom will pay the salesperson’s pay period commission advances and any other
amounts due on the next regularly scheduled pay day.
•In states requiring wage payment prior to the next regularly scheduled payday, Nordstrom will pay the
salesperson their guaranteed minimum draw, their hourly wage or their prorated salary for the hours worked
through the last date of employment, in addition to any other calculable amounts due. For employees on
a draw commission pay plan, Nordstrom will calculate the salesperson’s net sales commissions at the end
of the pay period in which the salesperson’s employment ends. If the salesperson’s net sales commissions
exceed the guaranteed minimum draw due the employee, Nordstrom will advance the difference. For
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employees paid on an hourly or salary basis, Nordstrom will calculate and advance net sales commissions,
if any, at the end of the pay period in which the salesperson’s employment ends. At the pay period following
termination, Nordstrom will also pay appropriate adjustments to all salespeople for premium pay, including
overtime, affected by commissions.
•Nordstrom will continue to calculate a salesperson’s net sales each pay period for up to 90 days following
the salesperson’s last day of employment. Nordstrom will advance additional commissions each pay period
following termination where there is a positive net balance and the value of the salesperson’s sales exceeds
the Held Net Balance or any returns since the salesperson’s termination. This may occur, for example, when
an item is sold before the last day of the salesperson’s employment, but is on back order.
I authorize Nordstrom to calculate, pay and report my commissions as described above.
printed Name
Employee Number
Employee Signature Date
If you have questions about how commissions will be paid during your employment or upon termination of
employment from Nordstrom, please see your Human Resources Office.
This agreement will remain in effect until the Company communicates a change to its terms.
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