Can a company not pay overtime pay if they are paying employees commissions?

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Can a company not pay overtime pay if they are paying employees commissions?

Recently the company I work for has changed their pay structure. They are paying commission on everything we sell. If we don’t make commission, they pay us supplemental pay. For example, if I made $400 in commission for 1 week, the company won’t pay us for the hour that we worked. Is this illegal in PA?

Asked on March 24, 2011 under Employment Labor Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

There is no discretion about paying overtime to non-exempt employees; that is, if an employee is not exempt from overtime, he or she must be paid overtime for any hours over 40 worked in one week, regardless of whether paid hourly, salary, piece work, or commission. (As a practical matter, the vast majority of employees earning overtime are salaried.)

So the question is whether you fall within one of the exemptions to overtime. There are four ones that are possible for employees in sales capacities: the outside (or field) sales rep examption, for sales reps whose primary job is selling (not paperwork) and who work mostly in the field; the retail sales exemption, for commissioned employees on the floor of retail establishiments; and the administrative employee and executive exemptions, which could apply to sales personnel who either do alot of administrative work and have considerable discretion, or who manage other staff. Go the federal Department of Labor and look under hours and wages, then overtime, to find the exemptions and see if your job meets any of them; if it does you don't get overtime, but if it doesn't, you very likely will.

Note that if you are independent sales rep--i.e. an independent contractor--you are not eligible for overtime.


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