Do I still get overtime if I am a commissioned salesperson?
In California, certain employees are exempt from receiving overtime pay, depending on their profession and compensation structure. Some salespersons, who are paid based on commissions, are exempt from overtime. However, many salespeople are eligible to get overtime when they work over eight hours per day or 40 hours a week in a pay period.
An employee who is classified as an outside salesperson is not eligible for overtime. An outside salesperson is an employee who regularly works outside of the office more than half the time. The employee earns commissions from selling items or by obtaining contracts or orders for services or products.
However, inside salespeople, who spend more than half their time inside an office (including a home office), are eligible for overtime under California law, provided they make less than half their total income from commissions. For example, an inside salesperson who makes $80,000 in base salary, and $60,000 in commissions, is eligible for overtime in California.
Under federal law, inside salespeople may also be eligible for overtime, even if they make most of their income from commissions, provided they work for a company that mostly sells to other businesses and not retail customers.
Overtime must be paid on all hours worked over 8 in one workday or 40 in one workweek. Salespeople eligible for overtime must be paid an overtime rate based on 150 percent of their hourly salary, plus 50 percent of their hourly commissions.
If you suspect your employer is relying on exemptions to avoid paying you the overtime you are owed, contact McCormack Law Firm right away. Our San Francisco Bay Area employment law attorneys are here to answer your questions.
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