Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Are You Paying Your Employees by Commission?
Many retail and service employers try to simplify their payroll obligations by labeling certain employees as “commission” or “commission only.” While federal law permits this practice in some circumstances, the rules are complicated and present many traps for the unwary. We discuss some of these potential pitfalls below, but the bottom line is simple: Employers should approach this practice with caution and must be prepared to substantiate the applicability of the exemption to each employee.
The federal Fair Labor Standards Act (FLSA) requires covered employers to pay employees overtime if they work more than 40 hours in a week, unless the employee falls into a specified exemption. One such exemption is for the commissioned salesperson (not to be confused with the outside salesperson). Where it applies, employers need not pay overtime compensation. The exemption applies to: 1) commissioned employees of retail or service establishments, 2) whose regular rate of pay is over 1.5 times the minimum wage for every hour worked in a workweek in which overtime hours are worked, 3) where over half the employee's compensation for a representative period represents commissions on goods or services. 29 U.S.C. ' 207(i) (Section 7(i)). Unless all three requirements are met or another exemption applies, overtime pay must be paid for all hours worked over 40 in a workweek at time and a half the regular rate of pay. Because the regular rate of pay for these employees includes commissions, overtime may be costly. Whether an employee falls within the exemption requires a detailed analysis that must be documented and regularly reevaluated. Mistakes may prove costly, as employers who fail to comply may be liable for damages, penalties, and attorneys' fees.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
How AI Has Affected PR
When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.