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Top Attorney Answers: Do I Get Overtime If I’m Paid On Commission?

On Behalf of | Mar 12, 2014 | Wage: Minimum Wage, Wage: Overtime |

Wage and Overtime Lawyer Best Answers: Does my employer owe me overtime if it pays me on commission? How much should I earn per hour if I also make commissions? Does Ohio have separate laws about commissioned sales representatives?

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Jobs are scarce these days. Often workers will take a job that relies fully or partially on commissions because they need to take anything they can get their hands on. After all, something is better than nothing. There are also numerous tech jobs that rely on the commission structure but are certainly not high-income positions. While many employees do not know this, the Fair Labor Standards Act (“FLSA”) protects employees who work on commission.

Under the FLSA employers must ensure covered employees paid on commission earn at least the minimum wage, the same as hourly or piece-rate employees. Employees paid on commission are also entitled to overtime for every hour over forty hours worked at a rate one and one half their regular rate of pay. The regular rate of pay includes any commissions earned.

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Under FLSA §207(i) there is a partial overtime exemption for employees working in retail or service establishments. An employer can use this exemption and not pay overtime to employees if their regular rate of pay is greater than one and one-half times the minimum wage and the employees receive more than half of all compensation on commissions for goods an services. A retail and service establishment is one generating at least 75 percent of its income from sales activities in an industry recognized as a retail sales setting. All three conditions must be met for an employer to be deemed exempt from FLSA overtime requirements.

Employers are not exempt from the minimum wage under the FLSA’s commission exemption; they are only partially exempt from paying overtime. As a matter of fact, to not have to pay overtime, sales employees’ hourly rate of pay must be greater than the minimum wage!

Does a commission have to be earned on the sale of a good or service or could the employee earn a portion of a flat fee an employer is charging customers for some service? Well, it depends. The Department of Labor (“DOL”) found that a $5 charge per dance collected by exotic dancers was a flat fee that was not based on the value of the service and thus was not a commission. But, the Eleventh Circuit has held that a mechanic receiving a flat fee could be a commissioned employee. Both cases turned on the how the flat fee was earned and the compensation structure underlying it. In the case of the exotic dancers they earned most of their wage from the flat fee so it was not considered a commission.

Ohio also has laws that cover commissioned sales representatives that our wage and hour attorneys have previously blogged about. Commissions are a complex way to pay employees and the intricacies of the laws are daunting. So, if you get paid partially or completely by commission and think your employer is not paying you in accordance with the FLSA and Ohio laws, please contact one of our wage and hour attorneys.

If you believe that your employer is not paying you all of your wages for all of your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Fair Labor Standards Act, contact the attorneys at Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. Or maybe you are being misclassified as an independent contractor. The wage and hour lawyers at Spitz, The Employee’s Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call 866-797-6040.

Disclaimer:

The materials available at the top of this overtime, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Am I entitled to overtime?”, “Does my job have to pay me for …”, “My paycheck is not right…” or “What do I do if…”, the your best option is to contact an Ohio overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of Spitz, The Employee’s Law Firm, Brian Spitz, or any individual attorney.

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