Wage and hour laws are already complex when applied to traditional hourly or salaried employees. However, when applied to commissions, they can become even more difficult to interpret and apply. Much like wait staff who rely upon tips for the bulk of their income, commissioned employees typically rely upon their commissions as part of their expected compensation. While budgeting is already difficult for commissioned employees due to unpredictable fluctuations in income, pay policies become simply intolerable when employers delay paying commissions, make unexpected deductions or simply miscalculate the amount due. Our experienced New York wage and hour attorneys at the law firm of Joseph & Kirschenbaum LLP can take the legal action on behalf of commissioned employees that is necessary to recover the compensation they are due.How wage and hour laws apply to commissions
The federal Fair Labor Standards Act (FLSA) allows employers to exempt commissioned employees from overtime requirements so long as these conditions are met:
- The employee is employed in a retail or service establishment.
- The employee's base rate of pay is such that he or she receives at least 150 percent of minimum wage for each hour worked in excess of 40 per week.
- More than half of the employee's income consists of commissions.
The FLSA neither requires nor regulates the payment of commissions. New York state law, however, does closely regulate commissioned employees. Under these laws, employees who receive any part of their compensation through commissions must be provided with a written employment agreement that recites the following:
- The method of determining the employee's compensation, including both wages/salary and commissions
- How the employee may draw on future commissions
- How often the employee is to be paid
- How often the employee's commissions are to be reconciled
- How commissions are to be paid upon termination of employment
Unlike federal law, New York State law does require the payment of overtime for commissioned salespeople who work on the employer's premises (but, like federal law, not for outside salespeople who travel to other locations). This means that employers may have to make up the difference if an employee's total income divided by hours worked does not yield a wage that meets minimum wage and overtime requirements.Safeguards for employee commissions
Once earned under the terms of the employee's employment contract, commissions are legally indistinguishable from wages and are entitled to the same protections. This means that employers cannot require any deductions beyond those authorized for wages. Commissions must be paid over promptly on established regular paydays. While employers can deduct to recoup commission advances, or draws against commissions, they can do so only from the portion of the employee's compensation that constitutes commissions and cannot deduct from his or her wages or salary.Protections for independent contractors who receive commissions
While independent contractors are deprived of many of the protections afforded to employees, commissioned independent contractors do enjoy some protections in the payment of commissions. Companies using independent contractor salespersons must provide a written commission agreement and all commissions must be paid within five days of becoming due under that agreement.Consult NYC attorneys who understand commissioned workers
Compensation for commissioned employees and contractors is rarely straightforward. Whether deliberate or accidental, this creates the potential for significant underpayment and the deprivation of rightfully earned compensation. If you believe you have been wrongfully denied commissions, whether you are an employee or an independent contractor, you may have legal recourse and a means for receiving that to which you are entitled. Our NYC wage and hour attorneys at the law firm of Joseph & Kirschenbaum LLP understand the intricacies of New York's wage and hour laws, especially as they apply to commissioned workers. We can thoroughly investigate your case and determine what legal options you may have. Call our office today to arrange a free initial consultation. We are available at (212) 688-5640 or online. Se habla espanol.