NJ Laws for commission only employee's

[Nikki71]

I own a hair salon in NJ and pay our employee's commission only. I was recently on a message board in regards to my industry and was informed that commission only may be illegal. In addition I was told that because I only pay commission I basically have no right to make rules in regards to their comings and goings, that for all intent and purposes the are "independant contractors" and they work for themselves. Is any of this true, as I want to not only be fair to our employee's, but I also want to follow the laws. Help please.......

[CurtJ.]

I really don't know the answer but can give the following generalities:

1) check the nj dol website on this. they likely have a faq (frequently asked questions) section or a bulletein or etc. TOr you might call. The state likes compliance and will help, but you might want to withhold name/address/etc.

2) I do think you're violating the law. If you "employ" people you must pay a basic wage and etc. Commission only, I don't think, is tolerable and usually it requires a "reduced" minimum wage, plus tips, to get over the minimum wage (think waiters in a restaurant). Employment means being able to discipline, set times, etc. On the other hand, independent contractor relathionships are okay, and you don't have to pay a minimum wage. but, you then lose certain controls like discipline and etc. This doesn't mean you can't end such a relationship, but its not "hiring" or "firing" and no direct discipline. instead, its setting a contract, terms, and enforcing the contract (e.g.: contract for hairdresser, must work 5 days a week during store hours, meet minimum standards of appearance, etc.). they might be then able to choose which 5 days, or what hours, or when to take lunch, or etc. You can cancel a contract for failure to honor its terms, but its not a firing or termination. Also, if you put too many controls in place, you've established an employer-employee relationship. The hallmark of independent contractor status is "independent judgment" in achieving the results or goals set forth in the contract.

again, please check with the state dol. you're not the first and this isn't a "new" or rare occurrence.

curt j.