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Non Sales Position, Forced From Salary to Commission Only- Is This Legal? Illinois

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  • Non Sales Position, Forced From Salary to Commission Only- Is This Legal? Illinois

    It has been brought to my attention that a meeting was held at corporate office recently, in which the employees were told that as of Monday, there would be no salaried employees but rather we were going to a commission only based structure. Although there are many employees in the office, I currently telecommute along with another individual and both of us are in different states than corporate office. We are not sales associated in any way. With that said, I have a few questions and would greatly appreciate any feedback of expertise:

    *Is this legal in the state of Illinois? Or, would we follow the laws of the states we currently reside?

    *Would we be eligible for unemployment? If so, what state would we file in- where corporate office is located or the state we live in?

    Thank you!

  • #2
    What do you sell? Where/how do you sell it? We do not need (or want) the name of your employet but there are some potential industry specific rules and the exact manner of what how the thing is sold can make a difference, as can the "where" of the sale.

    In fact, just be very clear, what are YOUR job duties, and what is YOUR industry? Do you do things other then sell? Is so what? How do you spend your time? Do not try to make this an "everyone in your company" question. The law is not worded that way. Narrow the answer to you personnally.


    Your starting point is federal law (FLSA) which is good in all 50 states. Under federal law, the only class commission only employee (that ignores hours actually worked) is Outside Sales. Which requires the employee to be physically traveling to customer locations at least 50% of the time actually selling things. A huge number of employer have tried that people in an office fall under this exception, and without exception, those employers have been hammered in court. The financial services industry was the most recent group to unsecessfully try that argument. The courts and federal DOL have made in VERY clear that someone selling on the phone, over the internet, or from a store is Inside Sales and not subject to the Outside Sales exception.

    Past that, not paying people on a salaried basis is (mostly) legal. Anyone can be paid hourly, as long as miniumum wage and overtime rules are followed. It would be perectly legal for Microsoft to pay Bill Gates as a minimum wage worker subject to overtime. What is legally refered to as "non-exempt". In fact, anyone can paid on a salaried basis as long as the MW/OT rules are followed.

    Where it gets interesting is when the employer does not want to follow the MW/OT rules. FLSA has something like 100 or so Exempt excpetions to the normal MW/OT rules. We just mentioned one of them, the Outside Sales exception. That makes all MW/OT requirements go away, but there are severe restrictions about exactly which employees it can apply to. So legally taking the salary away is not a big deal, but not paing MW/OT based on all hours worked is. If the emloyer wants to claim that one of the Exempt exceptions in play, then they need to follow all rules associated with THAT exception.

    There are exactly 4 exceptions (Executive, Administrative, Professional, IT Professional) that even have a salaried basis requirement, and it is not the salary which makes the employee Exempt, it is the requirements of the specific exempt classification that imposes the salary basis requirement, for those 4 exceptions only. Not all salaried employees are Exempt and not all Exempt employees are paid on a salaried basis.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)


    • #3
      I don't sell anything. I am an investigator specializing in collateral recovery of assets that have been charged off for 2 - 10 yrs yet the lien holder hasn't secured the asset. My days are spent completely investigating through means of database access that the public does not have access to, internet searches and interviews over the phone with relatives, associates, co workers, neighbors, etc in hopes to gain new information that will lead me to securing the asset.

      Thank you!


      • #4
        - There is no possibility what so ever that you can be paid on a commission basis that completely ignores hours actually worked.
        - It is perfectly legal to change your compensation agrement on a go forward bais absent a formal contract to the contrary.
        - It is perfectly legal to pay you (or anyone else) as non-exempt. Meaning at least minimum wage (on a workweek basis) and overtime (if applicalbe). It is maybe legal to create a specific compensation package that uses commissions, piece work, or sunspot activity as long as the actual MW/OT rules are not violated. Piece work could include you making calls or doing any other metric. Piece work (or commissions - sort of the same thing) is not an excuse to violate MW/OT rules.
        - It is maybe possible to claim that you are Exempt. Not likely but possible. Maybe under the Administrative exception. Possibly under the Professional exception if your professional creditions are such to impress the government. But to be sure it would mean knowing a lot more about your job duties and a lot more about your states history of classification in regards to your very specific occupation. Information I do not have and am not volunteering to research. The Admin and (mostly) the Professional exception tend to impose a $455/week salaried basis requirement in addition to a bunch of other rules.
        - You previously asked about if you quit, would you get UI. Probably not, although you have a possible argument if you have actual numbers documenting a large decrease in pay. HOWEVER, quitting always without exception greatly reduces your chances to getting UI. It is always better to shut up, keep your head down, and starting lookng hard for a new job. If your employer fires you because you are looking, THAT will qualify you for UI. No one in UI wants you to quit. No one in UI will have warm happy feelings for you if you do, and everyone in UI knows that deciding in your favor means money coming out of their pockets. If they have a good reason to deny your claim, they likely will, and you quitting is a great reason to deny your claim.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)


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