Exempt vs. Non-exempt

[jolson]

In California, we are thinking of paying a full-time outside salesperson a base plus commission. If we pay him the base, would that make him non-exempt? If so, is there another option to get around the hassle of keeping track of and paying OT?

Thanks!

[LConnell]

Outside salespeople are often exempt from overtime (as determined by the requirements of the Fair Labor Standards Act, coupled with a few requirements by the state of California).

As far as your first question is concerned, paying an outside sales person a base will not affect their exemption. What will affect their exemption are factors such as the amount of daily supervision they receive (where the employee could become non-exempt if they receive a lot of supervision without a lot of flexibility in determining their own outcomes) or if their salary is below the rate equal to double the full-time equivalent salary of $6.75 per hour (the California minimum wage). This equates to appoximately $28,080 per year.

If a person is exempt, then you don't have to track hours worked, overtime, etc. However, you are restricted from docking the employees salary in many cases (not all, however).

You can read more about the Outside Sales exemptions at: http://www.dol.gov/esa/regs/complian...tsidesales.htm

Let me know if you have any other questions.

[AndrewAK]

If you don't want to pay this employee overtime, and you want to offer a "base" pay plus a commition, make sure that the base pay IS NOT an hourly rate. If you offer a base pay that is calculated on an hourly basis, that employee may be non-exempt and may be owed overtime for hours worked beyond 40/week, or, depending on your State laws, 8 hrs/day.

CFR 541.500(c)- The requirments of subpart G of this part do not apply to the outside sales employees described in this section."

CFR 541.600 (Subpart G) All salary requirements in this section don't apply to ouside sales.

I would do some solid research and make sure you have an attorney look it over before hiring anyone.

Check-out the Fairpay website at http://www.dol.gov/esa/regs/complian...irpay/main.htm