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  • Over time and Commission Maryland

    Hi, I manange a dealership and I am considering changing the pay plan. This change is coming about for several reasons , from excessive time being taken to old pay plans for employee's that have been here for a very long time and have become complacent . My question is ... An employee making an hourly rate of $ 8.00 per hour and that employee works 48 hours in a week but also earns a commission of $ 300.00 in that week on top of their hourly rate , are they entitled to overtime pay ?
    Thanks for your help .
    Mike

  • #2
    What do they do? Inside sales?

    Inside sales employees in retail CAN be exempt from overtime if their average rate of pay (including hourly pay + commissions) is at least 1.5 times the federal minimum wage and the commissions are at least one-half of the employee's total pay over a representative period (of at least one month).
    http://www.dol.gov/dol/allcfr/ESA/Ti...CFR779.412.htm
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      Overtime And Commissions

      Thanks for the reply, they are inside auto sales and commissions vary but make up at least half of their total pay for the year anyway.
      Thanks

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      • #4
        In Mike's example ($8 per hour, 48 hours, $300 commissions), the employee would not be exempt from overtime. The commissions would be roughly 44% of the straight time plus the commissions.

        This is weird and not good, but, if you cut the base pay to the federal minimum wage, then the same amount of commissions would result in them being around 55% of pay and exempt from overtime.

        That may be legal, but it is wrong. The lower paid you are, the more likely you are to be exempt? The $8 per hour person gets $14.25 per hour before even adding in the overtime pay due (and there is some), but the $5.15 per hour person gets only $11.40 and does not qualify for overtime??

        Am I missing something here?
        Senior Professional in Human Resources and Certified Staffing Professional with over 30 years experience. Any advice provided is based upon experience and education, but does not constitute legal advice.

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        • #5
          How does the 1.5 times federal minimum wage work

          If the employee has been paid $15.50 an hour since November, and for 2 years prior to this, company changed ownership in November. The employer works 3 days a week, this is off season hours. Is laid off for the last 2 weeks in December. Comes back to work after New Years. Refuses to sign new contract that states they now work for commissions and will not have a job after April 16 (Tax Season). The company will only pay $7.50 an hour and commissions paid after employment ends. Company wants to pay the commissions by May 10th and only if employee remains with the company throughout the entire tax season. Company now H&R Block.

          Is this legal?

          Does employee have right to collect unemployment?

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          • #6
            If you refuse to sign the new contract, you are no longer employed. Chances are not good of receiving UC because you didn't want to sign.

            Commissions are wages in MD and must be paid if you earn them.
            I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.

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