Two weeks ago, Plattner Automotive Group, which operates 11 dealerships in the State of Florida, agreed to settle a U.S. Department of Labor investigation and pay $71,129.00 in back wages to its employees. The Department of Labor determined that the company had violated provisions of the Fair Labor Standards Act (FLSA). One of the points stressed by the Department of Labor in that case was that while there is an overtime exemption for commissioned automobile salespersons, such salespersons must still be paid at least the federal minimum wage for all of the hours that they work.
Most clients believe that most commissioned employees are not entitled to overtime pay. However, that is not true. Some retail sales employees are exempt from overtime pay, but these exemptions require specific compliance with certain requirements. The classic example is the case of automobile dealerships, where sales personnel are exempt from the overtime pay requirement. Yet, this exemption is absolute. There are certain requirements that must be met. In addition, with respect to automobile salespersons, they must be paid at least the minimum wage for all hours that they work, regardless of whether or not they make a sale.
Typically, automobile salespersons are paid a set "draw" which is usually based on working forty hours per week at the minimum wage or slightly above the minimum wage. Problems arise if the salesperson either works more than forty hours per week or does not sell any automobiles. The problem is compounded if the salesperson works more than forty hours per week and does not sell any automobiles. The salesperson receives the draw, but does not receive any compensation for work performed over forty hours per week.
Another exemption for commissioned salespersons is the retail sales exemption. Typically, salespersons in a retail store are not entitled to an overtime premium. However, in order to qualify for the exemption, the following requirements must be met: (1) the employer must be a retail store, with 75% of the annual sales being retail sales; (2) the employee's regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked; and (3) more than half of the employee's compensation must be in the form of commissions. If all of these requirements are not met, then the employer does not qualify for the retail sales exemption and an overtime premium must be paid for all hours worked over forty per week.
If you have questions regarding the commissioned employee exemption under the Fair Labor Standards Act or other employment laws, contact the Law Offices of Santiago J. Padilla, P.A. as soon as possible. Based in Miami, Florida, we represent employers and employees throughout South Florida in employment cases. To set up a free initial consultation, you can contact us through the Internet or call us at (305) 358-1949.
