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Top Wage Lawyer Answer: I Am Paid Only On Commissions; Am I Entitled To Overtime Wages At Time And A Half?

| Mar 27, 2014 | overtime time violation, Sales Commission Disputes |

Best Overtime Attorney Answers: Can I get overtime pay if I’m paid commissions? How should my overtime pay be calculated?  How do I find an overtime pay lawyer?

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Many employers think that they can avoid paying employees overtime wages or minimum wage because their employees are exempt. However, the Fair Labor Standards Act (“FLSA”) and Ohio Minimum Fair Wage Standards Act requires that the largest part of Ohio’s workforce must be paid one and one half times their hourly wage for any hours worked over 40 hours in a workweek. While there are some exemptions built in to the federal and state statutes to the general rule of overtime pay, these “exemptions” are often not as broad as employers would like them to be.

One example of an exemption under the FLSA is for employees of retail establishments who are paid based on commissions. In order for this exemption to requiring overtime pay to apply, the employer must show that they fit the definition of a retail establishment and also must prove that:

  1. The employee must be employed by a retail or service establishment;
  2. The employee’s regular rate of pay is greater than 1.5 times the minimum wage for every hour worked in a week when the employee works overtime; and
  3. More than half of the employee’s earnings in a representative period of time (no less than one month, but not greater than a year) are from commissions.
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All three of these conditions must be met for the exemption to apply. If only one condition fails, then the employee must be paid overtime wages for any hours worked over forty hours in one week.

Overtime Exemption Pay Example:

Shawn works for a retail establishment selling tires. Shawn is paid strictly on a commission basis, meaning that he gets paid a small portion of each sale he makes, but does not get an hourly rate of pay. According to the statutes, conditions #3 and #1 above are met. However, during a busy week, Shawn comes in to work on his day off and ends up working 60 hours in one week. However, Shawn doesn’t sell as many expensive tires as he had hoped, and instead sells a large amount of cheaper tires, so his commission check for the week is for $528.00. Based on this example, condition #2 is not.

By dividing Shawn’s total earnings for the week ($528.00) by the total number of hours worked in the week (60) Shawn made $8.80 per hour. However, one and one half times the minimum wage is $11.77 per hour. Even though Shawn’s employer pays him only on a commission basis, he does not meet the conditions of the exemption and is entitled to overtime wages.

This is just one example showing how any employer may believe they don’t have to pay overtime, when in fact, the exemption does not apply.

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 or you are an nonexempt employee that has been misclassified as exempt, contact the attorneys at The Spitz 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 The Spitz 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 The Spitz Law Firm, Brian Spitz, or any individual attorney.