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Financial services commission only? California

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  • Financial services commission only? California

    I recently accepted a job at a wealth management firm as a full-time financial adviser associate, but have not started as i need to pass the series 65 license exam (investment adviser representative). The position is commission only, where I will be paid as a percentage fee of assets under management for every client I obtain plus an initial signing bonus. I know certain jobs/professions are exempt from minimum wage laws, but i am wondering if this job applies to minimum wage law exemptions. Put another way, legally will my employer owe me minimum wage when i start work?

    The only evidence i see that might apply as an exemption to the minimum wage law is under the professional exemption (#3 under the applicability of order in the legislation here: http://www.dir.ca.gov/IWC/IWCArticle4.pdf ). However, the professions listed under subsection (a) do not include financial services, so does this exemption apply to ANY person who has ANY license or certification by the state of California? That seems like a stretch to me, but I am also not a lawyer. Subsections (b) and (c) under the professional exemption could possibly apply as well, but once again im not a lawyer and do not understand the correct interpretation of those descriptions.

    Bottom-line i would just like to know if my employer will owe me minimum wage?

  • #2
    Short answer is that based on what you have said, you are not exempt from the minimum wage requirement.

    Longer answer starts with federal law (FLSA). This law among other things mandates minimum wage and overtime for most employees. There are something like 100 or so exceptions in FLSA for MW, OT or both. One of the these exceptions is the Professional exception. IF you qualify for the federal Professional exception, THEN you would be replace the normal federal MW/OT requirements with a Salaried Basis requirement of at least $455/week. Not MW, but not nothing. Certainly not "commission only". The only federal exception which supports "commission only" is the Outside Sales exception, which requires you to go door to door to customers. Many financial services firms tried arguing that people who work out of an office (or at home) using phones or the internet qualify for this exception. Those folks lost big time in court over the past 3-5 years. That is a very dead issue today. Federal DOL is very clear that phone and internet sales is not Outisde Sales under federal law.

    About now you are probably asking why am I talking about federal law when you cited a CA rule? Because CA is part of the USA, and fully subject to federal law. CA labor law is in addition to federal law, not instead of. And the CA Professional exception mostly has a Salaried Basis requirement of $640/week (higher then the federal requirement). There are a few exceptions for teachers, doctors, lawyers in the Professional exception, but not for the duties you are mentioing.

    It is also questionable if you even meet the professional requirements for either the federal or CA standards, but the answer is either you do not and are subject to CA MW/OT or you do and are subject to CA Salaried Basis of $640/week. Either way, there is zero chance that an employee in CA (or the USA) can be truly "commission only" without falling under the Outside Sales rules. While CA rules are not indentical to the federal rules for either the Professional or Outside Sales exception, they are close enough to give no comfort to your employer.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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    • #3
      Okay thank you, this information helps a lot. Are there any other possible exemptions the you think could possibly apply to my situation that would permit my firm to employ me as a commission only employee?

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      • #4
        I can repeat my last answer.
        - The only legal exception which turns off both MW/OT without imposing different requirements is the Outside Sales. This is the traditional meaning of "commission only".
        http://www.dol.gov/whd/regs/complian...tsidesales.htm
        - It is black letter law that Outside Sales requires the employee to actually go door-to-door selling things. Not telephone sales. Not internet sales. Many finanical industry firms have tried this argument and they all without exception got hammered in court.
        Last edited by DAW; 07-03-2012, 05:41 AM.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

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        • #5
          Thank you, I really appreciate it

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