Whatare the legalities of paying a commission?

I am a self employed graphic designer and have been working with a print broker for many years. She pays me 10% commission for any printing that is generated from my graphics/client. One client found out about this and he is saying it’s illegal to do that without notifying the client. He’s calling it a “kickback.” I have read several forums from graphic designer that always get commission from their printer. Is this legal or not?

Asked on October 21, 2011 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

There are certain professions where this not allowed--doctors and lawyers, for example, have stringent rules against "finder's fees," commissions for referrals, etc. However, I do not believe that this applies to graphic designers, so it's probably not per se illegal.

Where there could be a problem is if there was no disclosure of the relationship to the client. If there was not, then the cliient could conclude that you referred him to this print broker for your own benefit and no other reason. Depending on the circumstances, this could potentially be, for example, a breach of contract: you do work for a client pursuant to an agreement (oral or written); all contracts have an implied covenant of good faith, which requires the parties to show good faith in executing them; referring someone to a broker who may not be best for him or may charge a higher rate (e.g. to pay your commission) could be a violation of this covenant.


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