Commission Vrs. Minimum Wage

[tgough2002]

What is the name of your state? California

If a Commission Employee doesn't earn a commission in a month is the employer entitled to pay the employee a minimum wage for that month? What if the commission employee has earned enough in previous months to cover the minimum wage?

 

[seniorjudge]

Commission employees are not generally covered by minimum wage.

 

[tgough2002]

What if?

What if the commission employee only earns a wage coley by commission and is required to work a minimum of 40 hours/week and in a 160 hour month doesn't earn a commission?

 

[seniorjudge]

What if the commission employee only earns a wage coley by commission and is required to work a minimum of 40 hours/week and in a 160 hour month doesn't earn a commission?

Since you keep adding new allegations, just tell us the whole story with all the facts and details.

 

[tgough2002]

Story

I am looking at opening a business where I would be hiring sales people and wanted to see if I hired them straight commission am I required to pay them minimum wage if they do not earn a commission in a month. I will require them to work 40 hours a week. I can see where it is possible that employees would earn more in a month the annual mimumum wage, but where they may not make a sale in a month or two after that.

 

[seniorjudge]

I am looking at opening a business where I would be hiring sales people and wanted to see if I hired them straight commission am I required to pay them minimum wage if they do not earn a commission in a month. I will require them to work 40 hours a week. I can see where it is possible that employees would earn more in a month the annual mimumum wage, but where they may not make a sale in a month or two after that.

Then what you must do is get an experienced employee-law attorney to draw you up a contract.

 

[ArmyRetCW3]

Then what you must do is get an experienced employee-law attorney to draw you up a contract.

No contract would be valid if is contrary to federal law, FLSA, in this case. On every commission paid worker there must be a settlement period (29 CFR 516.16), in which the commission is settle. Usually once a month or it could be longer, but no smaller than a month. If the employee failed to meet the required sales quota for that month, and did not sell anything, the employer is required to pay the applicable minumum wage to that employee. Regardless, if the month prior the employee earned a zillion dollars in commission. The prior month has already been settle, the employer can not go back and say, " in last month you made $10,000 in commissions and this month you made $100, last month will cover this month also." That is why there is a settlement period required under the FLSA... Failure to follow this rule may disallowed the commission payment agreement, hence overtime may be due, if overtime was ever worked by the employee.

 

[ArmyRetCW3]

Commission employees are not generally covered by minimum wage.

This is not correct. If the commision employees is not exempt he is entitle to the applicable minimum wage and or overtime provisions of the federal law (FLSA). Take for example mortage loan officer/originators (inside sale), usually paid in 100% commissions, however, if they failed to meet their sales quota for a particular sattlement period, they are due the applicable minimum wage and overtime, for that particular settlement period. On the other hand the same mortage loan office/originators (outside sale), exemption may be applicable. Each “sales force” loan officer/originator must be evaluated on an individual basis to determine whether he or she qualifies for the outside sales exemption.