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draw against commission California

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  • draw against commission California

    Hi, I was in sales and received a "draw against commission" paycheck. I am now in a legal battle for unpaid wages, overtime, etc. My former employer is trying to say I was overpaid because he apparently paid me when I was out sick and/or in the hospital. I did not keep track and I doubt he did either. If I owe, I owe, no question about that. My question though is- if I received a "draw against commission", and I wasn't actually there- shouldn't my commissions have been paid without deductions? For example,

    I work 40 hours and get paid $1,000
    I make sales to equal a commission of $1,000, so nothing is due

    If I am not there, then I do not get paid wages, HOWEVER, the sales I made (ongoing business) equal $1,000 even if I am not present

    I know this is so confusing, I am confused myself. Can anyone answer with this limited information or point me in the right direction? Thank you.

  • #2
    Anytime someone mentions sales and commissions, the starting point is to find out if the Outside Sales exception is applicable. Very basically, outside sales has one set of rules and all other sales persons have a different set rules. There is a second complication in that CA has different classification rules then the feds do, which is legal. But the feds have pretty clear rules and CA does not, at least as far as Outside Sales goes. There are a bunch of CA court cases currently in the process of being decided that will eventually clarify this.

    Your starting point is to see if you are Outside Sales. If so, then you basically have no payment basis protection and the rules are very pro-employer. If not, you are subject to minimum wage and overtime rules. Until we know which set of rules you are under, it is hard to give you a meaningful answer.

    There is a federal exception called Retail/Service Establishment exception, but this exception apparently is NOT supported in CA, leaving only the "normal" MW/OT rules (assuming that the Outside Sales exception is not applicable.

    Federal Outside Sales rules

    CA Outside Sales rules.

    outside salesperson
    Any person, 18 years of age or older, who customarily and regularly works more than half the working time away from the employer's place of business selling tangible or intangible items or obtaining orders or contracts for products, services, or use of facilities.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)


    • #3
      Thank you for your response. Based on the info you provided, I did not work 50% or more outside, so I was not outside sales. Hope this helps.


      • #4
        It is then to your advantage to claim that you are subject to the so-called "normal" rules. That you must be paid at least $8/hr for all hours worked and that you must be paid overtime for all hours worked past 40 in the workweek. The problem with draws for Inside Sales, especially in CA, is that the draw cannot interfer with MW/OT. It is not possible for the employer and employee to have an agreement which is illegal on it's face, and for an employee under the "normal" rules, failure to pay MW/OT would do that.

        If you are not keeping track of actual hours worked, start. A paper notebook at home works very well for this.

        Past that you may or may not have contract law issues. As long as MW/OT rules are followed for CA Inside Sales, there is some theoretical flexibility. However, CA DLSE is pretty good at enforcing legal compensation agreements. I do not know the specifics of your situation but if the employer tries to change the terms of employment retroactively, that legally causes problems. On the other hand, changing the terms of employment on a go forward basis following notification is generally legal.

        I cannot say that draws are always legal or always illegal, but I can say that "draw" is not a magic word that makes other laws go away.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)