Under the Fair Labor Standards Act, retail or service establishment employees can be exempt from overtime pay requirements if they are paid more than one and a half times the minimum wage and more than half of their compensation is comprised of commissions on goods or services (“commissioned employee”
Articles Discussing Commissions Under the FLSA.
National Appliance and Electronics Retailer’s Sales Commission Policy Was Lawful – For the Most Part, Sixth Circuit Rules
In what may be viewed as a pyrrhic victory, now-defunct[1] “big box” electronics, appliance and furniture retailer hhgregg’s commission-with-draws compensation program generally was lawful under the FLSA, the Sixth Circuit Court of Appeals has held. However, its policy holding employees liable for any unearned draw payments upon termination of employment would violate the Act. Stein v. hhgregg, Inc., 2017 U.S. App. LEXIS 19908 (3rd Cir. Oct. 12, 2017). The Sixth Circuit has jurisdiction over Kentucky, Michigan, Ohio and Tennessee.
Commissioned Sales Employee Not Entitled To Commission Payment Under The Plain Language Of Incentive Compensation Plan
This blog has stressed (most recently here and here) the importance of carefully drafting incentive compensations plans to avoid unintentionally converting incentive compensation into earned “wages” protected under state law. Another recent decision, this one from the Court of Appeals for the Seventh Circuit reinforces the employer benefits of careful drafting. Lawson v. Sun Microsystems, Inc., 2015 U.S. App. LEXIS 11201 (7th Cir. June 30, 2015).