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  • 100% Commission & Time Cards Connecticut

    Can a retail establishment pay 100% commission (no salary at all) and mandate that the employee work a minimum of 40 hours in store AND submit time cards? This sounds crazy. Basically the store is getting Free man hours demanding that individuals cover the stores when there is no business and no possibility for the individual to make any money on certain days AND in slow periods, but they are still required to work.

    It appears that they may be able to get away with this by providing the employee with a draw. However, I can't see how the individual is even an employee.

    Any advice is appreciated. This is the store's new policy as of Jan. 1. Previously they paid the employees a weekly salary of $400.00 plus commission. Stores are in NY, CT, and NJ.

    Thanks Designbee

  • #2
    100% commission is legal only for outside salespeople. Unless you are outside sales, you must receive at least minimum wage for all hours worked and overtime for hours over 40 in a week.

    Beyond that, yes, it is quite legal to require a minimum of 40 hours a week AND to complete time cards.
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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    • #3
      Mostly agreed. For Inside Sales, minimum wage is black letter law, period, no exceptions.

      Overtime is a little tricky. There actually is something called a 7(i) exception, more commonly referred to as the Retail/Service Establishment exception. However 7(i) is not exactly a magic bullet. It basically eliminates the overtime requirement, but at the cost of a generally more expensive (to the employer) mandatory commission requirement. And if the employer fails to follow 7(i) (their choice), then the "normal" overtime rules apply. If you are not selling anything, not getting commissions, then the "normal" overtime rules likely apply. The one complication is that the 7(i) exception uses a "look back" period, commonly a month, so as long as the right amount of commission is being paid (on average) for the look back period, "normal" overtime is turned off.
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)

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      • #4
        100% vs minimum wage Connecticut

        DAW

        Thanks for your response regarding the Federal law which mandates that inside retail sales employees receive minimum wage. 2 ?s. 1. Do you know the Federal Regulation cite that indicates that inside retail sales employees MUST receive at least minimum wage, or do you know where I can find the regulation if you do not know the cite? &

        2. Do I understand correctly? That the retail employee must make MINIMUM WAGE each hour worked plus commission? or, Can the 100% commission be sufficient if ultimately it equates to the minimum hourly wage, at the end of the month? Say, If an employee works in the store 40 hours per week and the first 2 weeks of the month, he/she makes 0 commission; but in the next 2 weeks (also 40 hour weeks) the employee ends up making enough commission to cover minimum wage for the total 160 hours worked that month, is that sufficient? Thanks there are 8 retail stores with alot of anxious employees, who were receiving a minimum salary plus commission, who are now receiving NO salary at all.

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        • #5
          How about if I give you a pointer to the DOL website that talks about commissions and MW. Just to be clear, I did not say that "employee must make MINIMUM WAGE each hour worked plus commission?". Credit where credit is due. You made up that rule all by yourself. I said what I said, and that was not it. What I said was:
          - The Retail employee must be paid (at least) minimum wage. Please note how that phrase does not have the word "commission" anywhere in it.
          - I also said that either the employer pays overtime under the "normal" rules or the employer has the option of following the 7(i) rules. The 7(i) rules only discuss commissions and those rules are optional and related to overtime only, not minimum wage.

          http://www.dol.gov/compliance/topics...ommissions.htm
          "Reality is that which, when you stop believing in it, doesn't go away".
          Philip K. **** (1928-1982)

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