Commissioned Employees

Over 15 years ago, Atlanta overtime attorneys at Martin & Martin litigated their first wage case which involved a retail commissioned employee. Since then, the Atlanta overtime attorneys have represented commissioned employees recovering their unpaid overtime wages in addition to liquidated damages, and attorney’s fees and litigation costs. The commissioned employee Atlanta overtime attorneys at Martin & Martin fight to recover unpaid overtime wages on behalf of their commissioned employee clients throughout the state of Georgia whose employers violate the federal Fair Labor Standards Act (FLSA) by improperly paying them.

Atlanta overtime attorneys, Kimberly Martin and Tom Martin, have a combined over 30 years of legal experience in litigating FLSA cases representing employees whose employers have not paid them properly. While Kimberly and Tom’s first case was a commissioned employee wage case over 15 years ago, employers have not only continued to violate the FLSA, but, recently, the Department of Labor (DOL) identified the Retail Sales Industry as one of the industries that violates the pay laws most often. This means that there are millions of retail services employees in this country who are owed unpaid overtime wages in addition to other damages.

The federal FLSA requires Georgia employers to compensate all employees at least minimum wage for all hours up to 40 hours in a given workweek and at least time and one-half for all hours over 40 hours in a given workweek as overtime wages. However, the FLSA has several exemptions to this overtime requirement. One of the exemptions is the retail services exemption that applies to some commissioned employees.

The FLSA’s retail services exemption for commissioned employees is quite simple:

1. The worker must work at a “retail and/or service establishment” as defined by the statute as those entities with 75% of their annual dollar volume of sales of goods and/or services is not for resale and is recognized as retail sales and/or services in the particular industry;
2. The worker’s regular rate of pay must be in excess of one and one-half times the minimum wage; and
3. More than half of the worker’s compensation for a representative period represents commissions on goods or services. In determining the proportion of compensation representing commissions, all earnings resulting from the application of a bona fide commission rate shall be deemed commissions on goods or services without regard to whether the computed commissions exceed the draw or guarantee.

This means that if an entity meets the definition of a “retail and/or services establishment” and it compensates employees on a commissioned basis then it must sure that the employee’s regular rate of pay is greater than $10.88 per hour and more than half of the employee’s compensation is from commissions.

For example, if a clothing sales associate works 45 hours per week and their total pay equals $450 with $400 of that as commissions, the employer is in violation of the FLSA. This is because the regular hourly rate computes to $10 per hour ($450/45 hours) which is in violation of the requirement that the hourly rate of pay must compute to at least $10.88 per hour.

Another example, is a weight loss services employee who is paid $20 per hour plus commissions and they work 50 hours per week. They also make an additional $250 in commissions for a total paycheck of $1250 for the week. While the hourly pay of at least $10.88 is met, the requirement that more than half their pay is from commission is not met.

When a Georgia employer is found to be in violation of the retail services exemption of the FLSA, it means that the employer must compensate the employee for all overtime hours within the last two years or three years depending on the facts of the case. This leads to the question of how to calculate a retail services employee’s overtime pay. Typically, because the employee is paid a different amount each week depending on the amount of sales they make, the overtime rate must be calculated each week. Using the examples above, the first employee’s computed hourly rate is $10 per hour, so, their overtime rate is $15 per hour (which they have already been paid the straight time pay of $10). Using the second example above, the employee’s regular rate is computed as $25 per hour ($1250/50 hours). Therefore, their overtime rate is $37.50 (of which they have already been paid the $25 straight time).

Atlanta overtime attorneys also fight for liquidated damages. The FLSA provides for liquidated damages also known as “double damages” for successful employees. This means that if a retail sales associate’s total owed overtime equals $5,000, the Court will order the employer to pay an additional amount of $5,000 in liquidated damages. Plus, the Court will order the employer to pay the employee’s attorney’s fees and litigation costs.

1. Does the employee receive commissions as part of their pay?
2. Do they work for a “retail and/or services establishment” as defined by the FLSA?
3. Has the employee worked more than 40 hours in any given workweek within the last three years? (Remember to count all hours worked, including work “off the clock,” “on call,” etc.)
4. During the weeks that the employee worked more than 40 hours, what was their computed regular hourly rate (total pay/total number of hours)?
5. Was the employee’s regular hourly rate greater than $10.88?
6. During the weeks the employee worked more than 40 hours, did commissions constitute at least half of their pay?

Retail services employees who wonder whether they are entitled to unpaid overtime are encouraged to contact Atlanta overtime attorneys Kimberly Martin and Tom Martin for a free confidential consultation so they can walk through your wages and hours and determine whether you are entitled to unpaid overtime and if so, how much overtime your employer owes you. You can contact them through the Contact Us page or call the firm directly.

The overtime attorneys in Atlanta at Martin & Martin are usually available to respond to your questions on the same day. For more information about the FLSA, check out the firm’s Overtime Blog and Frequently Asked Questions.