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Commission Pay Regulations (TX and FL) Florida

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  • Commission Pay Regulations (TX and FL) Florida

    I am looking to set up a compensation package for "commission only" salespeople. I plan to make the standard benifits apply (ie...Health insurance, vacation pay, 401k, bonuses, etc..) Is this method more complicated legally than hourly or salary? BTW... I am a texas company doing business in several states, but mainly FL and TX.
    Thanks,
    J

  • #2
    Requirements of the FLSA Commissioned Sales Exemption

    Among the myriad of exemptions from overtime eligibility is the Section 7(i) exemption (codified at Section 207(i) of the FLSA). For this overtime pay exemption to apply, a three-part test must be satisfied. First, an individual must earn more in commissions than in non-commission income for a pre-determined representative period of not less than one month. Non-commission income includes salary, guaranteed draw and other salary-like payments. Second, there must be proof that, on a workweek-by-workweek basis, the individual receives compensation (commissions, base pay and other compensation) that equals or exceeds time and one-half of the federal minimum wage (currently $6.55) for all hours of work. Finally, the worker must be employed in a "retail or service establishment." The Wage-Hour Administrator's regulations have defined narrowly which businesses qualify as "retail or service establishments". These longstanding regulations were not modified by the Department of Labor's 2004 revision of the regulations covering the white-collar exemptions.

    The "representative period" to test an employee's compensation should be of sufficient length to reflect, fairly, as many factors as possible. The period chosen should be long enough to stabilize the measure of the balance between the portions of the employee's compensation that respectively represents commissions and other earnings (bonuses and contest prizes) against purely seasonal or plainly temporary changes.
    It is a good policy for retail and service employers to have a written agreement with commission salespersons acknowledging that the compensation plan is based upon Section 7(i) of the FLSA and, therefore, no overtime will be paid. Such an agreement should at least contain these elements:
    • definition of the pay period (i.e. calendar month),
    • the pay date for each pay period,
    • the hourly rate for every hour worked (may not be less than one and one half times the prevailing minimum wage),
    • definition of the representative period, and statement of the basis of the Section 7(i) exemption from the overtime provisions, and
    • the signature and date of both parties.
    § 779.413 Methods of compensation of retail store employees.
    (a) Retail or service establishment employees are generally compensated (apart from any extra payments for overtime or other additional payments) by one of the following methods:
    (1) Straight salary or hourly rate:
    (2) Salary plus commission:
    (3) Quota bonus:
    (4) Straight commission without advances:
    (5) Straight commission with ‘‘advances,’’ ‘‘guarantees,’’ or ‘‘draws.’’
    At periodic intervals a settlement is made at which time the payments already made are supplemented by any additional amount by which his commission earnings exceed the amounts previously paid.
    ========================================

    "A veteran - whether active duty, retired, national guard, or reserve - is someone who, at one point in his or her life, wrote a blank check made payable to The 'United States of America', for an amount of 'up to and including my life.'" (Author unknown)

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    • #3
      May I ask the OP if we are talking about Inside or Outside Sales? And perhaps the nature of the product being sold?
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)

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      • #4
        OUtside Sales. Commercial Construction. Flooring Installation. Salesperson is responsible for "closing the deal" b/n our company and the General Contractor.
        Thx

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        • #5
          See if the following applies.

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

          Comment


          • #6
            That is exactly what I needed, Thanks a lot!

            Comment

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