Given the complexity of the Fair Labor Standards Act, it is often difficultfor employers to determine whether commission-paid salespersons are entitled toovertime pay when they work over 40 hours in a work week. If an employerimproperly denies an employee overtime pay in violation of the FLSA, it could beliable for the unpaid overtime, liquidated damages, and the employee'sattorneys' fees. The FLSA requires employers to pay workers who are not exempt from the FLSA'sprotections (nonexempt employees) overtime pay in an amount of one and one-halftimes their regular hourly rate for each hour they work over 40 in a work week.This rule generally applies to all nonexempt employees, including those paid bycommissions instead of an hourly wage. Employers often mistakenly believe that their commission-paid salespersonsare exempt (and, thus, need not be paid overtime pay) under the well-known andcommonly utilized exemptions for "white collar" professionals.However, the white collar exemptions for executive, administrative andprofessional employees are only available if the employee is paid on a salarybasis. That is, the employee regularly receives each pay period a predeterminedamount representing all or part of the employee's compensation that is notsubject to reduction based upon the quantity or quality of the employee's work.Accordingly, strictly commission-paid employees, by their very nature, cannotfall under the white-collar exemptions. The FLSA provides three types of exemptions that could apply tocommission-paid salespersons. First, commission-paid salespersons could beexempt from overtime pay under an industry-specific or job-specific exemption.For example, the FLSA specifically exempts salespersons primarily engaged inselling or servicing automobiles, trucks, farm implements, trailers, boats oraircraft. Second, commission-paid employees could be exempt as "outside"salespersons. The exemption for outside salespersons is met if the person isemployed "for the purpose of and who is customarily and regularly engagedaway from his or her place or places of business" in making sales orobtaining...
Commission-Paid Salespersons Entitled To Overtime Unless Specifically Exempted
|Author:||Mr Dennis McClelland|
|Profession:||Holland & Knight LLP|
To continue readingFREE SIGN UP