Min Wage & Commission

We have approximately 80 sales reps, many of which are commission-only.  Currently, as a part of the weekly payroll process, we double-check that each sales rep has enough in commissions to guarantee they earn at least minimum wage per hour.  For at least 95 percent, they're well above that requirement, but we do have others who struggle to hit the (state) min wage of $7.25. 

I've gone over the FLSA multiple times, but cannot find anything referencing this point.  Are we legally required to subsidize these hourly rates for commission-only staff to ensure they hit the minimum hourly? 


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  • There are only two possible exemptions that I know about:

    (1) Outside Sales -- http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_541/Subpart_F.htm; States that they are not required to have a minimum salary based on Subpart G

    (2) Section 7(i) -- here is a link to an opinion letter that talks more about the 7(i) exemption...there are a lot more hoops to jump through than what you stated, so I would assume your company either doesn't fall under retail OR doesn't use this exemption.  This exemption not only requires minimum wage but 1 1/2 times minimum for every hour worked plus commission >50% over a representative period. http://www.dol.gov/esa/whd/opinion/FLSA/2005/2005_11_14_53_FLSA.pdf

    Other than that, there are other miscellaneous exemptions, those are just the two largest. 

    Beyond that, every employee must make minimum wage for the hours they work.  If they are not making enough sales to justify their minimum wage, then you need to look at job performance issues and whether/how much the employer can pay out before it becomes an issue.

  • Do they meet the definitions of travelling or outside salespersons?  If not, I think about the best you can do is make up the difference and charge it back against future commissions.  When they terminate, you cannot attempt to collect the charge backs that are due to making minimum wage beyond charging back commissions on their subsequent checks after all hours are accounted for and paid at no less than minimum wage.

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