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Is an employer required to pay overtime on commission for inside sales? New York

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  • Is an employer required to pay overtime on commission for inside sales? New York

    If an employer extends overtime for base hourly wage and commission for a month for an inside sales job, are they required to pay that overtime on the commissions made during that month? If so, how would the time and a half calculation be applied to the commission? What are the repercussions for not paying the overtime on commissions if it hasn't been paid by a certain amount of time?

  • #2
    Commissions are generally a factor in overtime compensation. Having said that, however, it's possible that the retail exception could apply, wherein the overtime premium is not required at all. Straight-time for the hours over 40 in a work week would still be required, but the premium portion would not be required if the below exception applies.

    http://www.dol.gov/whd/regs/compliance/whdfs20.pdf
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    • #3

      Assuming that the FLSA 7(i) retail and service overtime exception is not applicable to the employee then the employer is required to pay overtime on all wages received by the employee. Overtime payment is not separated by base hourly wage and commission, actually is just the opposite.

      Again if the FLSA 7(i) retail and service overtime exception is not applicable to the employee, all wages received including commission are added together. Follow this formula;

      Base wages
      + commissions
      = total wages
      total hours worked (including hours over 40)
      = regular (hourly) rate
      2

      = time overtime rate
      x overtime hours
      = overtime due
      + total wages
      = total amount of wages due


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      • #4
        Agreed with the other two answers. Easy stuff first. Keep a worksheet. Record all hours worked. Make sure that the minimum wage requirement is being followed.

        Past that, read the cited document. And if your employer has a formal policy or agreement, you really need to read it. IF the employer is trying to use the 7(i) exception, THEN they had to have picked a base period for commissions. The 7(i) rules are sort of a safe harbor exception to the normal overtime rules. IF the employer follows all of the 7(i) rules, THEN the normal overtime rules go away. HOWEVER, if the employer fails the 7(i) test (and the rules allow for this), then the normal overtime rules kick in.

        So, once you under stand your company's plan rules, expand that worksheet to include both the "normal" overtime rules and the minimum 7(i) liabilities, plus what was actually paid. This is certainly more work on your part, but it is a legal exception (if the employer follows the rules), and there actually can be a reason for the employer to want to use this exception.

        Last HOWEVER. Many employers fail to follow either the normal overtime rules or the 7(i) rules. If so, we are talking wage claims (plus supporting documentation).
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

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