Certain California employees are paid on a commission basis. Their California employers base their pay on a percentage of each sale made. Classic examples include real estate sales persons, auto sales persons, and so forth. The commission is intended to benefit the employee, whose skill results in additional sales, and encourages the employee to maximize sales.
However, employers often abuse the commission sales rules. This is most common where employers improperly withhold overtime pay, or fail to properly calculate the premium overtime rate.
Salespersons Who Earn Commission
If you earn overtime, then your commission must also be factored in to your overtime premium rate. However, not all commissioned employees are eligible for overtime. Commissioned employees are exempt from overtime if (a) they earn more than half of their income from commissions, and (b) their income is one and a half times California’s minimum wage per hour.
Which Commissioned Employees are Entitled to Overtime?
You are entitled to overtime if any of the following apply:
- total compensation, including commissions is less than $12 per hour;
- total value of commissions is less than half of the employees total earnings;
- the employee is not principally selling the product or service;
- the employee does not work in retail, or in a qualified professional, mechanical, or technical position.
Is the “Commission” Legitimate?
However, for an employee to be exempt from overtime, the employee’s compensation must truly qualify as “commission.” An employer cannot reimburse the employee with a bonus and designate it as “commission” simply to be “off the hook” from paying overtime.
To be legitimate, a commission, the employee’s work must principally be selling the product or service. For example, say Ed Employer runs a hardware supply store. He has three cashiers. The cashiers assist in directing customers to the desired hardware supplies. Sometimes, the cashiers even help push the products through hyping and some salesmanship. However, their main task is to run the cash registers. Ed cannot pay them commission instead of hourly and overtime pay because they are not principally tasked with selling Ed’s products.
On the other hand, a real estate agent would be a good example of an employee who is exempt from overtime pay on account of being a commissioned salesperson. With every sale, the real estate agent earns a commission or percentage bonus for sales of homes that he or she has shown to prospective buyers. Therefore, in this instance, the employer would be exempt from having to pay the employee overtime compensation.
The commission status of an employee as a sales person is not solely a function of the job title. California law looks to the employee’s job duties and salary to reach a determination. Even if an employee agrees to forego overtime, under California labor law, overtime compensation is nonetheless due.
Unpaid Commissions Class Action Lawsuit
If you and your coworkers have been denied commission, or have been denied overtime as a result of misclassification, our Los Angeles employment lawyers, Los Angeles overtime compensation and Los Angeles unpaid commissions class action lawyers can file a class action lawsuit on your behalf. We will fight to ensure you are paid your commission and any other compensation to which you are entitled.
At The Nourmand Law Firm, we are experienced, seasoned and highly-skilled employment attorneys. We have a track record of success and excellence in representing our clients. Our clients are generally employees who suffered a wide range of abuses: wrongful termination, discrimination, demotion, denial of compensation (including the minimum wage, overtime, compensation for meal periods and rest periods) and other actions that violate the California Labor Code. We are experienced and knowledgeable in prosecuting lawsuits for unpaid commissions on behalf of our clients.
We represent clients who have been their commission pay in Los Angeles, Koreatown, Pasadena, San Bernardino, San Fernando Valley, San Gabriel Valley, the South Bay and throughout Southern California.