Commissioned salespeople are entitled to overtime pay for hours worked each week over 40 hours! This is true unless they fall under the inside sales exemption, which requires that each sales employee is paid at least one and one half (1 1/2) times California's minimum wage, or $13.50 an hour (currently, the California minimum wage is $9 an hour).
Why is this information significant? The California Supreme Court ruled on this exact point this Monday in the case of Peabody v. Time Warner Cable.This is a proposed class-action lawsuit brought by a former saleswoman who worked 45 or more hours each week on a regular basis. Ms. Peabody's bi-monthly paycheck, however, was based on a 40 hour work week at an amount less than 1 1/2 times the state minimum wage.
In Peabody, defendant Time Warner Cable argued that their monthly payment of commission to Ms. Peabody should be applied to all of her monthly wages, which would exceed the 1 1/2 time rule. The California high court disagreed with Time Warner.
The general rule in California regarding exemptions to the Wage and Hour law, aside from the white collar exemptions (executive, administrative, and professional) and the inside sales exemption discussed above, there is the outside sales exemption. The outside sales exemption applies to employees who are 18 years old or older and spend more than one-half of their working time away from the employer's place of business selling or obtaining orders or contracts for products, services or use of facilities. It is important to keep in mind that there are nuances to these exemptions.
At TONG LAW, we specialize in handling cases involving wage and hour litigation. Contact us to discuss.