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commission wages
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commission wages
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The owners of our company want to pay our field technicians in CA and several other states (hourly non-exempts) on a commission basis. These techs will not qualify under the section 7(i) exemption bec
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Forums » Topic Forums » Benefits & Compensation » commission wages
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commission wages
posted at 7/21/2010 10:25 AM EDT
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Posts: 94
First: 2/7/2008 Last: 3/21/2011 |
The owners of our company want to pay our field technicians in CA and several other states (hourly non-exempts) on a commission basis. These techs will not qualify under the section 7(i) exemption because they are not selling products or services in a retail establishment-they are providing the service. What the owners think is happening is that some techs don't complete jobs because it is more financially beneficial to go back on a different day since they are paid hourly at a substantial hourly rate. The company wants to provide an incentive to complete the job on the first call and wants to pay a commission based upon completed jobs. Whether this is really commission (a percentage of the price of the service)or a performance based bonus is still unclear.
As much as I would like to get a compensation specialist to help with this, I know the company will not pay for this. I would like to provide the best advice I can as far as staying compliant with state and federal laws. Any help is appreciated. I believe that as long as we pay minimum wage for hours and overtime wages, we should be able to pay commission or a bonus based upon the completed calls. Then eventually we will need to apportion the commission/bonus that they get over hours worked during the period that it is covering to determine their regular rate of pay and pay the extra overtime based upon the new rate. Does this sound correct and does anyone have any better suggestion (aside from terminating the slackers)? Thank you. |
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commission wages
posted at 7/21/2010 12:02 PM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
You can NOT use section 7(i) and they would not fall under the Outside Salesman exemption. So you are correct under both of those.
Yes that is correct. And actually getting the reg rate of pay and increasing OT calculations can be cumbersome. But it must be done. It's easier if the commission is paid over the same time period as the pay period, but I know it is often only done 1 time per month/quarter. This works better with semi-monthly processes rather than biweekly. Because biweekly processes never fall under a specific month and often cross over. |
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commission wages
posted at 7/23/2010 9:25 AM EDT
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Posts: 94
First: 2/7/2008 Last: 3/21/2011 |
There is a change to this now. I've determined that what the owners actually want to do is to pay piece rate. The techs will get the piece rate for each completed job if it is higher than a set hourly wage which will be above minimum wage. Otherwise, they will just get the set hourly wage.
Since they are not exempt from OT, the regular rate of pay and overtime calcs will be the same as for commissions or bonuses. What rate is paid though for holidays and vacation in these instances-piece rate or commission wages? |
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commission wages
posted at 7/23/2010 11:12 AM EDT
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Posts: 94
First: 2/7/2008 Last: 3/21/2011 |
And one more question. If we have been paying as hourly wages, is there any issue with changing to a piece rate now? Technically they will still get an hourly rate, but it will likely be quite reduced for some. |
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