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Employers Can’t Short Commissioned Employees Legally Mandated Overtime Pay

April 20, 2015 by

Here is an important update and clarification for employees who work on commission. Just because you are paid a commission does not mean you are not entitled to overtime pay for hours worked in excess of 40 in a week or 8 in a day. Instead, to be exempt you must also be an “outside salesperson” or a commissioned employee or “inside salesperson” of certain retail or service business, as those terms or defined by federal or state law.  These definitions can be complex so be sure that you know your rights in terms of overtime time pay.

  • The insides sales exemption applies only to employees who
    • earn at least one and one half the state or federal minimum wage and
    • over half of total pay is comprised of you commissions.
  • Whether you are exempt as an “outside sales” employee under federal law is determined by whether you spend more than half of your work time off-site for the purpose of selling or obtaining order for products or services.

State laws may also differ. For example in California, to qualify for the outside sales exemption you must (1) make more than 150% of the state minimum wage and (2) not only spend more than half your time outside your employer’s premises, but must spend that time doing sales or selling-related activities, as opposed to non-selling activities such as making deliveries, stocking, merchandising, installation, servicing existing customers or other activities not directly related to making sales.

If you are paid by commission and think you may have been denied overtime pay due you, please call us for a confidential consultation at one of our offices in the Sacramento Valley, Bay Area or Upstate New York.


Other BTB Blog articles related to this topic:

Route Salesman Exempt from Overtime Laws

Commission Pay Cannot Be Shifted to Other Pay Periods


The reader might also find this useful:

 Department of Labor – Commissions


The material on this website is provided by Beeson, Tayer & Bodine for informational purposes only and does not constitute legal advice. Readers should consult with their own legal counsel before acting on any of the information presented. Some of the articles are updated periodically, and are marked with the date of the last update. Again, readers should consult with their own legal counsel for the most current information and to obtain professional advice before acting on any of the information presented.