One of the most difficult parts of being an employer who pays commission is determining under the commissioned salesperson exemption (which has different requirements than the outside salesperson exemption)— is my salesperson exempt. Now, conducting a google search will likely lead you astray, causing common mistakes and an oversimplification of the requirements which leads to violations of California Labor Laws.
In order for your commissioned employee to qualify as exempt under the commissioned salesperson exemption, your employee needs to earn more than one and one-half the minimum wage and earn more than half of their compensation from commissions. In addition, this requirement must be satisfied on a per pay period basis. Meaning, that you cannot just use your employee’s year end totals to claim they are exempt. As the employer, you need to review your employees earning each and every pay period to determine whether or not they qualified as exempt during that specific pay period.
More importantly though, even if your commissioned employee does qualify as exempt under the commissioned salesperson exemption, that employee is only exempt from overtime. Meaning, that employee, despite qualifying as exempt, must still be compensated for rest and non-productive time. As such, it is important to make sure that you are tracking your employees’ time properly; auditing your employee’s time; and have the requisite employment policies in place. Otherwise, failure to do so can lead to extensive and expensive litigation.
If you have any questions regarding your current employees’ classifications, how to pay commission properly and California Labor Compliant, you should immediately contact the Employer Lawyers at Chauvel & Glatt.
This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute legal advice. For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500. (photo credit: 123rf.com)