Overtime Rules for Inside Salesperson Commissions
If your business sells products or services, it is likely that you have at least one inside salesperson who earns commissions on the sales that the inside salesperson makes. If this inside salesperson has the potential to earn a decent amount in commissions, your company may have classified this salesperson as an exempt commissioned employee. This means that you are not paying this person overtime pay for overtime hours worked. If this is the case, you may be incorrectly paying your inside salesperson and exposed to a potential claim for wage theft. Exempt vs Non-Exempt Classification Certain commissioned inside sales employees may be exempt from overtime pay in California if the employee earns more than one-and-a-half times the minimum wage each workweek, and more than half of the employee’s compensation represents commission earnings. (Outside salespeople do not need to meet the minimum salary requirements.) The calculation on the second prong could get complicated where the employee gets a draw on commissions. In addition to the two prongs, in order for an inside salesperson to be exempt from overtime pay, a … Continue reading
The Basics – Paying Employee Commissions Part II
Paying employees on a commission basis makes a lot of economic sense for employers and employees in many instances. However, the fact that wages earned on commission are contingent upon numerous factors makes it fraught with labor law landmines and failure to properly pay employees’ commissions could constitute “wage theft” in California. I previously discussed the basics of paying employees a commission. In this part, we will examine a few more common issues with commission pay in California. 1. What if a commission only employee earns no commission in a given pay period? California labor law requires that every employer pay each employee at least minimum wage for all hours worked in a payroll period. If the employee is a non-exempt employee and works overtime, s/he is also entitled to overtime pay, even if she failed to “earn” any commissions in that period. 2. Are all commission employees exempt from overtime? No. The default rule in California is that employees are entitled to overtime pay and meal and rest breaks unless they fall under certain exemptions. There is an exemption … Continue reading