Commissioned employees receive a certain amount or percentage of a sale or membership in a site or account. However, most of these workers also receive an hourly or salary-based paycheck in addition. When working, the individual may face subjective wage and hour laws that require the company to increase payment such as for overtime and holiday pay. Even if the person receives a commission for the work, he or she may still receive overtime pay and extra amounts in holiday pay based on the laws of the state or country. For some companies, these matters have specific outlining in the company handbook or through hiring contracts.
How Commission Works
When an employee performs certain services for a company, he or she may receive payment for the duties in a percentage or a prearranged amount. This commission acts as a bonus or extra payment. Commission-only payment is not legal for the employer, and the company must supplement the commission through minimum pay standards through the state laws. Even if this only amounts to minimum wage for the state, the employee is still subject to other laws such as overtime and benefits as a full-time employee. The amount in paychecks is often greater than other employees, but they still receive a standard paycheck in addition to the commissions.
Exemptions Commission Paid Employees
The Fair Labor Standards Act has a direct involvement if a company has exemptions in paying employees the same as through usual income earners. Those that may find exemptions in place are executive, administrative professional and computer employees. Other such as outside sales, higher compensated workers and similar individuals in a company may remain exempt from the typical payment scheme through the FLSA. Managerial employees usually have a minimum salary that qualifies as an exemption with no less than $23,000 a year. With a salary basis in employment, they are exempt. Administrative employees have similar circumstances in that they receive salary income. These could include accountants, marketing workers and others in a higher professional position.
A professional exemption is similar to managerial positions with a minimum salary of at least $23,000 per year. These employees must have a learned professional position in advanced knowledge of a specific area of study. This is often a field learned through college with a degree. Others must remain as a creative professional where the work uses imagination, creativity, originality and similar creative outlets. These are generally artists, dancers, actors, performers and composers of music. When these employees exist within the company, the standard wages and hours may not apply due to the exemptions generally in place.
Other Exemptions for Commission Paid Employees
Computer employees generally must meet certain standards through salary or hourly pay to have an exemption to overtime, holiday and other benefits within the company as a mandatory action. These may include work through systems analysis, programming, engineering with software and similar positions. Duties at the company may need to encompass testing, oversight, functions with applications and hardware and software generation. Outside sales agents must work away from the office and either make sales or create service contracts that provide compensation for standard pay. Other highly compensated workers must earn no less than $100,000 a year. This may involve work as an executive, administrator or professional at the higher or highest level.
Issues to Remain Aware of by the Employer
If the person is not exempt from the standards for labor and wages through hourly pay or related salary requirements, the individual would earn 1.5 times the hourly rate when working overtime. Making up the difference with tips and other bonuses must ensure that the person makes at least minimum wage. Additional benefits of health insurance and other amenities also apply for full-time workers.
Legal Support for the Commissioned Employee
If someone working with commission is still a nonexempt employee working through hourly pay, he or she may need legal support when the wage and hour laws are not in adherence in the company. The lawyer may need to help in pursuing a legal claim for compensation of lost income.