Twelve Common Errors in Overtime Pay: Commission Only Pay Plans

Kevin D. Fitzpatrick, Jr. : April 2, 2012 1:31 pm

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record-keeping and youth employment standards for workers in the private sector and government.  Covered non-exempt workers are entitled to overtime pay of at least 1.5 times regular pay if they work more than 40 hours per week.

Another common problem area:

12. Commission-Only Pay Plans

Sales employees, mortgage brokers and other employees often work on a commission-only pay formula.  If you make no sales in a week; you will make no money.  Employers who pay on this basis risk FLSA exposure if a commissioned employee (other than an “outside salesperson”) earns less than $7.25 for each hour worked in any given week or if the commissioned employee works more than 40 hours in a week.  FLSA exemptions are always defined by what you do, not how you are paid. Even commission paid employees are eligible for the overtime pay premium for hours worked over forty in a given workweek.

If you are an employer or an employee and have questions about the Fair Labor Standards Act, call the FLSA experts at DeLong, Caldwell, Bridgers, Fitzpatrick, & Benjamin, LLC, Charles Bridgers and Kevin Fitzpatrick, at (404) 979-3150 for a free consultation.  For more information, check out our publication,  Are You Entitled to Overtime Pay?

 

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