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Overtime laws could apply to employees who are paid commission

California employees whose pay consists partially or entirely of sales commissions might want to know more about overtime laws and their exemptions. The federal Fair Labor Standards Act spells out various exemptions, but employers may not always follow the regulations, and this could expose them to employee overtime claims.

If the work duties and payment structure of an employee do not meet federal and state exemptions, then that person could be entitled to certain wage and hour law protections. In general, an employer must pay one and a half times the regular rate, which must be at least minimum wage, for all time worked beyond 40 hours within a work week. One exemption to this standard applies to outside sales employees. This type of employee sells goods and services for the company and is almost always away from the place of employment. An employer of such a person would not have to pay any minimum wage or overtime. However, if the sales employee has an office at the company and is there sometimes, then overtime rules must be followed.

Overtime exemptions for retail stores that employ commission sales associates also impose requirements. In general, an employer does not have to pay overtime if the worker's commission exceeds the overtime rate for minimum wage. At least half of the worker's salary must also come from commissions.

A person who needs clarification about the legal exemptions from overtime pay might choose to consult with a lawyer instead of relying on information from an employer. If the work records show that minimum pay standards were not met, then a lawyer could contact the company and ask that the employee be paid correctly. If necessary, a lawyer could prepare an unpaid overtime claim and pursue the matter with the appropriate agency.

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