Rights of Commission-only Paid Workers | Mann & Elias
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Rights of Commission-only Paid Workers

Employer-Employee Commission Agreement in Los Angeles

If you have a job in sales, you are probably familiar with your rights as an employee working completely through a commission-based system. The federal government protects commission-only workers through the Fair Labor Standards Act (FLSA). The law enforces employers to fairly compensate employees upon completion of a specified number of commissions, as listed in the written agreement. In this case, commission-only workers can expect to get paid through sales instead of an actual salary. As an employee, you are entitled to the same protection offered to hourly or salaried workers – especially when it comes to minimum wage and overtime.

The Los Angeles employment attorneys of Mann & Elias are dedicated to helping you handle commission disputes with your employer.

Minimum Wage

Employees who are paid on commission have a right to get paid minimum wage. Unless exempt, an employer should keep a record of the hours worked to avoid the risk of getting sued for unpaid wages. Since 2019, the federal minimum wage for non-exempt employees is $7.25 per hour. As an employee, if you are offered said amount, you may be able to negate it with a workplace lawyer in LA. California is one of many states with accommodating minimum wage laws, which require employers to pay more than what the government allows. For companies with more than 25 employees, you should expect to work for $14.00 per hour or more.

Depending on the terms of your written commission agreement, your employer may not permit you to make minimum wage for the hours you contribute each week. If that is the case your employer is obligated to account for the differences in pay. For instance, when you divide your total pay by hours worked, you will have a general idea about the minimum wage. If you worked 40 hours on commission and received $250, your hourly wage would be $6.25. To avoid the risk of liability, your employer would need to provide you with $40 to make up for lost wages.

Overtime Pay

Non-exempt employees working on commission may be eligible for overtime if they work:

  • More than eight hours a day.
  • More than 40 hours a week.
  • More than six days in one workweek.

If you meet one of the three requirements your employer must pay you one-and-a-half times over your hourly pay. But, if you worked more than 12 hours in one day, more than 8 hours, or 7 days a week the overtime rate should be doubled. Like the minimum wage, an employer will also have to adjust the differences in pay by your commissions. The sales you make do not and are not intended to compensate you for working more than your allotted time. If you are unsure of California’s policy, a LA attorney for commission overtime pay can provide insight and help you determine whether you qualify. If you do, an employer cannot deny you extra pay.

According to FLSA, a company is exempt from offering overtime under three conditions:

  • If the business is a service or retail.
  • An employee is earning more than $50 of income from the commission.
  • The company pays employees more than one-and-a-half of the legal minimum wage.

Retail of Service Qualifications

The Department of Labor is responsible for determining which businesses qualify as a retail or service. Around 75% of any business’s annual sales are from the original purchase as opposed to a sale or re-sale, according to Chron. You should know the type of industry you work for; in the event, you undergo a dispute and need to retain a lawyer for sales commissions in Los Angeles.

Exemption of Outside Sales

If you work outside of the employer’s place of business and still earn a commission, you may be excluded from protection under FLSA. An employer can deny paying you minimum wage and overtime if you are a door-to-door salesperson, or pharmaceutical rep, for example. When you spend more time delivering than selling products overall an employer will not be able to classify you as an exempt outside salesperson.

Example of Industry Specific Commission

Car dealerships are one of many in popular, profiting commission-based industries. Car salespeople rely on commission to make a consistent profit, as employers may pay employees once a month. Sometimes paydays are assigned in advance. Those that sell products or services at a car dealership are paid on a commission basis depending on the value of the sale itself.

Some employees that work for a dealership are paid a fixed rate. If the value of the sale is not reflected in their pay, an employer would consider them as a “piece rate” employee. Because employers in the dealership may be paying employees by either commission or fixed rate, they must pay close attention to detail to their paycheck or pay stub requirements. If not, they have the legal right to file a wage claim for unpaid commissions with a work dispute attorney in LA.

About Mann & Elias

The Law Offices of Mann & Elias is an employment law firm that provides guidance and legal support for individuals facing issues in the workplace. We represent clients at every level of the state and federal court systems in lawsuits regarding discrimination, wrongful termination, unpaid wages, and more. When your case is in our hands, we hope to minimize stress and concerns associated with work.

Workplace disputes and negotiations can be complicated and uncomfortable between an employee and employer. In many cases an employer can retaliate, causing individuals to feel that they are at a great disadvantage in the company. When you retain one of our lawyers, you will be well-protected and advised. While there are thousands of lawyers to choose from, we strongly believe our success is based on:

  • 50+ years of trial experience
  • Excellent advocacy skills
  • Intense preparation and research
  • Quality care

Since our partnership began over 20 years ago, we have settled hundreds of claims, completed 100 jury and bench trials, and recovered more than $18 million in settlements. In the end, our goal is to understand what you need and achieve the best outcome for you by focusing on those needs. For dedicated representation with no upfront fees, give us a call at 323-866-9564 or email info@mannelias.com.


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