Sales commission plans normally don’t have many rules and regulations. But in certain industries there may be some that you have to watch for and make sure you are not breaking them.
One of the industries that is expected to do well in this economy is college education. People are more likely to turn to further education to improve their prospects and the stimulus bill will make it even more attractive. For-profit colleges which depend to a substantial degree on students who receive government aid will be paying attention to this. They use paid recruiters to enroll eligible candidates. Usually the commission plans are based on the number of enrollees brought in by the recruiter.
According to a Business Week article on this subject, this industry is subject to a rule that says that the recruiter compensation cannot be solely based on the number of students they sign up. This is to avoid the unethical canvassing and signing of students and to prevent abuses. This rule was introduced as part of the Higher Education Act. Companies have settled violations by paying millions of dollars.
There are a few such rules that typically tend to be industry or state specific. Please make sure you are compliant with these rules while designing your commission plans.
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- For Profit Colleges Have Compensation Restrictions - March 15, 2009