Commissioned Sales

Commissioned employees are covered under the FLSA if they meet certain requirements. However, employers fail to pay overtime on many occasions.

If a retail or service employer elects to use the overtime exemption for commissioned employees, three conditions must be met:

  • If you are made to wait until you are needed without the permission to leave
  • If you are forced to pay for things out of your own pocket. Some examples include;
    1. cash or merchandise shortages,
    2. required uniforms, and
    3. tools necessary for work.
  • If you are paid a salary but your job duties do not meet all the requirements specified by the regulations to be considered as exempt from overtime pay.

If a retail or service employer elects to use the overtime exemption for commissioned employees, three conditions must be met:

  • The employee must be employed by a retail or service establishment;
  • The employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked; and,
  • More than half the employee’s total earnings must consist of commissions.

Unless all three conditions are met, the FLSA exemption is not applicable, and overtime pay must be paid for all hours worked over 40 in a workweek at time and one-half the regular rate of pay.

Outside and Inside Sales

Employees who generate their own sales or obtain orders may be labeled “outside sales” employees by their employers. If an “outside sales” person devotes more than 20% of the hours on work to jobs other than making sales, she may well be due overtime.

The same standard applies to “Inside Sales.” True “outside sales” employees are not due overtime pay. Whether “Inside Sales” employees are due overtime depend on the job duties performed. Unfortunately, this is a very common problem. Remember: it does not matter what your job title is. What matters are your real job duties.

Crone & Mason, plc has successfully represented employees in a national class action involving the misclassification of “inside sales” employees.

Crone & Mason, plc obtained a favorable and non-confidential settlement for all “inside sales” employees because much more than 20% of the hours were clerical and non-sales related.

By calling some employees “inside salespersons,” employers have used this scam to get free office work or unskilled labor.

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