San Diego Commissioned Sales Employees Lawyer

How Does Commission Pay Works

Employers must pay at least minimum wage for all hours worked by commission sales employees. It is not permissible for an employer in California to “average” pay earned from commission sales over the course of the day to cover the minimum wage obligation for uncompensated hours. This time must be separately compensated.

For example, department store commission employees, furniture sales employees, and other retail sales employees who perform duties outside of their commissionable time for mandatory meetings, paperwork, etc. must be paid at least minimum wage for this time. Commissioned sales employees can include:

• Retail
• Mortgage
• Insurance
• Securities
• Automobile
• Sales representatives
• Inside outside sales in real estate

Rest Periods

In addition, employees paid by commission must be separately paid for 10-minute rest periods. Every non-exempt employee is entitled to a paid 10-minute rest period for every four hours or major fraction worked. Since employees working by commission do not receive compensation for rest period, employers must pay this time at the employee’s regular rate of pay.

Unreimbursed Expenses

Commission sales employees must be reimbursed for all expenses and may not have commissions reduced for training costs, seminar costs, telephone charges, mailing costs, postage, subscriptions, office supplies, office equipment, wages of the support staff, costs associated with transaction errors, costs to settle disputes with customers, and other necessary business-related costs or expenses that result from their employment.

Some examples of covered expenses include:

Unpaid Overtime

Inside sales commission employees are entitled to overtime if their regular rate of pay does not exceed one and one-half times the applicable minimum wage for every overtime hour, and they do not earn more than half their weekly income from bona fide commissions.

Employees who perform outside sales work are owed overtime if they spend less than 50% of their time engaged in actual outside sales and related activity. Outside sales does not include sales made by mail, telephone, or the Internet, unless such contact is used merely as an adjunct to in-person sales visits with clients.

Thus, any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer’s places of business, even though the employer is not in any formal sense the owner or tenant of the property and does not constitute time engaged in outside sales. Sales that originate by telephone generally do not qualify as outside sales.