I've worked for a computer repair company for 10 years and was paid by the hour. About a year ago the owner sold to another company who continued to pay me my hourly rate even though the rest of the employees were paid on commission.

Now after a terrible end of the year in service and sales I was informed that I will be paid 38% of all gross profit on sales and service with no hourly pay. My problem is I'm being required to be at work 40 hours a week whether there is work or not. So I could potentially work 40 hours for nothing. Is this legal?

No. Minimum wage is required (I'm assuming you do the actual repair work) irrespective of commissions earned. If the commissions for the workweek do not average at least minimum wage, the employer must make up the difference. Plus, you must receive the premium portion of overtime pay when required by CA law.

Not only what Patty said, but what you are paid is actually a modified piecework rate. In California in order to be classified as commission the compensation must be based on the sales price of the product or service. In a true commission structure the employer cannot use any calculation that includes the cost of doing business.

Thanks for the quick responses!

I didn't think it sounded right. That would be a pretty big loophole around minimum wage. I'm not currently filling out time cards because I was told I'm on commission and it doesn't matter. But I wonder if that's so I can't legally prove the hours I've worked? I probably need to get something in writing spelling out my work hours and pay. Would an email be good enough?

My other concern is I've read somewhere that people who are paid more than 50% by commission aren't eligible for unemployment insurance. But I think that may have been outdated information or from another state because I can't seem to find anything to back it up.

Another gray area seems to be employee vs independent contractor. From what I understand employees would fall under minimum wage/set schedule whereas independent contractors are only required to complete the jobs they are contracted for and don't have any set hours as long as the job is done in the allotted time.

We're definitely employees who receive W2s, not 1099s, and all deductions are made by the payroll company.

Thanks again for your help, I'm feeling really pressured because so many are out of work and jobs are scarce. They're basically using the bad economy as leverage to scare their employees into toughing it out to save the company money.

Not only what Patty said, but what you are paid is actually a modified piecework rate. In California in order to be classified as commission the compensation must be based on the sales price of the product or service. In a true commission structure the employer cannot use any calculation that includes the cost of doing business.

They calculate my commission based on the amount above cost of merchandise (including shipping) that I sell and 100% of my labor sales. Is that not normal?

"Normal" is sort of a "who cares". Lets stick with what is legal.

You cannot legally be paid on a 100% commission basis that ignores hours worked. Period. The only way this would be legal is if you are Outside Sales, and based on what you have said, you are not. Federal law (FLSA) does not support this. CA law does not support this. And CA law cannot make federal law go away.

As Patty said you must be paid at least minimum wage ($8/hr) in CA. And you must be paid overtime under the CA overtime rules.

Now does the employer owe you more then minimum wage? Maybe. Maybe not. Piece work rates or whatever one wants to call this are not inherently illegal, but use of these payment methods cannot make the MW/OT rules go away. If you think you can make an argument that more then MW/OT is owed, then make your argument to CA-DLSE. But you cannot legally be owed less then MW/OT, so do not lose track of the "sure thing" among any "maybe/possibly" arguments.

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One other possibility. There is a federal exception called the Retail and Service Establishment rules. I am not certain that CA supports these rules (never had a reason to research this). CA overtime rules would seem to get interesting in regards to these rules unless CA specifically made an exception. HOWEVER, these rules do not make the MW/OT rules (at the federal level) go away as much as they alter them. If "commissions" fail to reach a certain point, the "normal" MW/OT rules kick in anyhow, so I strongly suspect that one way or the other you are looking at the "normal" MW/OT rules.

if you work inside the office more than 50% of the time you must be paid 1.5 times min wage or $12 per hour or you are entitled to overtime pay..also you must receive 1/2 or more of your money from a bonafide commission structure or you are entitled to overtime pay.