• Paul Peter Nicolai

Mass Retailers must pay OT to commission-only salespeople

Retail salespeople paid on a 100-percent commission basis are entitled to separate additional payments at one and a half times the minimum wage for overtime and Sunday hours.

The Massachusetts Supreme Court decided that the pay structure did not satisfy the state’s overtime and Sunday pay laws even though the employees received commissions that were higher than what the overtime and Sunday overtime would have paid. They needed to be paid those amounts IN ADDITION TO the commissions.

The Court said the language and purposes of the overtime statute, the regulatory guidance, and its previous case law established that in most circumstances employers could not retroactively reallocate and credit payments made to fulfill one set of wage obligations against separate and independent obligations. It said that using the employers’ interpretation would incentivize them to have employees work more than a 40-hour week and discouraging them from hiring more workers – contravening the purposes of the overtime and Sunday overtime laws.

The Court noted that employers relied on two Department of Labor Standards’ opinion letters and the calculations they contained. The Court said the opinion letters were less than a model of clarity and may have misled employers but retroactive allocation and crediting is impermissible and separate and additional overtime is owed.

Some claim the Court’s analysis does not reflect the reality that it is frequently commissioned salespeople who seek extra hours to earn more commissions, not employers insisting they work them.

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