Badge - California Employment Lawyers Association
Badge - Orange County Bar Association
Badge - OCTLA
Badge - Consumer Attorneys of California
Badge - State Bar of California
Badge - American Association for Justice

Commissioned Salesperson Exemption

If you are a sales employee and earn commission, perhaps you have been told you do not qualify for overtime. If so, that might be true. Both federal and state law require employers to pay “non-exempt” employees a minimum wage and overtime pay. One category of so-called exempt employees includes “Commissioned Salespeople.” Although a Commissioned Salesperson is a narrow category, employers tend to assume that any sales employee qualifies. As a result of employer’s mistakes, many employees miss out on the overtime pay to which they are entitled.

What is the Commissioned Salesperson Exemption?

The Fair Labor Standards Act (“FLSA”) is the federal law that governs the minimum wage and overtime pay. It is important to note that an exemption is not based on the employee’s job title. An employer cannot exempt a sales person just by calling that sales person a Commissioned Salesperson. Instead, the exemption is based on the salesperson’s substantive responsibilities and pay.

In order to fall under the federal “Commissioned Salesperson” exemption, an employee must meet each of the following requirements:

  • the employee must be employed by a retail or service establishment;
  • the employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which the employee has worked overtime hours;
  • more than half the employee’s total earnings must consist of commissions.

The California Labor Code’s definition is largely similar, but operates differently. Both California and federal law exempt employees whose regular rate of pay exceeds one and one-half times the applicable minimum wage for every hour worked in a workweek in which the employee has worked overtime. Federal law allows employers to consider commissions paid in one pay period to subsequent pay periods in order to calculate the employee’s pay rate. But California does not allow this. In California, the exemption only applies if the employee earns one and one-half times the rate of pay in each pay period. This effectively makes it harder for California employers to exempt salespeople and gives salespeople more opportunities to earn overtime.

Employers Often Err in Applying the Commissioned Salesperson Exemption

The rules regarding the Commissioned Salesperson exemption are confusing. So it is not uncommon for employers to misapply the exemption. Many employers assume that any employee who works in sales falls under the exemption, but this is not true.

Contact a Misclassification Lawyer Today

If you work in sales and believe your employer has improperly denied you overtime pay--you might be right. An experienced employee misclassification lawyer can help you collect the overtime pay you have earned. Contact the skilled attorneys at Nassiri Law Group, at (949) 375-4734 to schedule a free case evaluation.

Client Reviews
★★★★★
From the moment I walked in until the moment I stepped out, I felt welcome at Damian’s law offices. His staff is very courteous, and Damian conversates with you in a manner that is understandable. He leaves the lawyer talk for the courthouses and really explains the laws in detail, but at the same time in a manner so that the average Joe can follow. Thank you for your services! Rodrigo Aranda
★★★★★
Hands down the most educated expert in cannabis law! Mr Nassiri is such a pleasure to work with, hes real with you and looks out for the best interest of yourself and your business. I really appreciate his input and I am proud to have him as my attorney. Bstyle Kim
★★★★★
I appreciate an intensive behavior of Nassiri Law group. Damian did a great job. When I met him, I immediately realized that this is the person I want to work with. He helped me a lot by answering all my questions in a wise and professional approach. He provided to me all important info what I needed at that time. Honestly, I think that Damian is one of the best Lawyers I have ever met. Aleksey Globenko