Title: Pay change
Hello I sell cars for a living and we were recently told our pay structure was going to completely change. We were paid straight commission and now we are told we have to be paid by the hour? That we can’t work over 40 hours now and we can’t sell a car on our days off?!!
Can you explain this new law or tell me where I can find this info. Also can we be paid salary plus commission so hours don’t come to play?….
Hi Mark,
Thank you for your question. As far as I know, the law on commissions has not changed, but a court decision came out last year that reinterpreted California’s minimum wage and break laws. It sounds like many employers are now correcting their practices to conform to the interpretation in that case.
The case is called Vaquero v. Stoneledge Furniture, LLC. It held that employers who pay non-exempt employees solely on a commission basis must separately compensate the employees for time they spend on their rest breaks. And that separate compensation must be at least equal to California’s minimum wage. (Vaquero v. Stoneledge Furniture, LLC (2017) 9 Cal.App.5th 98, 108.)
In addition to this main holding, the court strongly implied that time spent on tasks unrelated to the earning of a sales commission must be separately compensated at a rate that is equal to at least California’s minimum wage. A similar conclusion was reached by a federal court back in 2012. (See Balasanyan v. Nordstrom, Inc. (S.D.Cal. 2012) 913 F.Supp.2d 1001, 1007.)
These cases create a problem for employers of people who work solely on a commission basis, because it’s hard to track which time is dedicated to sales-related activities and which time is not. So it sounds like many employers are choosing to switch to a system where employees are paid a base hourly rate plus a reduced commission amount.
That we can’t work over 40 hours now and we can’t sell a car on our days off?!!
If you are a non-exempt employee, California law requires you to be given premium overtime pay anytime you work:
- More than 8 hours in a workday,
- More than 40 hours in a workweek, or
- Or on the seventh consecutive day in a workweek. (Labor Code, § 510, subd. (a).)
It sounds like your employer wants to avoid giving you premium overtime pay, so they are prohibiting you from working more than 40 hours per week. Your employer is allowed to decide your work hours.
Also can we be paid salary plus commission so hours don’t come to play?
To avoid things like break premiums or overtime pay, you would have to be considered an “exempt” employee. An exempt employee is someone whose job is not subject to one or more sets of wage and hour laws.
There are a few types of exemptions that might apply to a car sales employee, but they would heavily depend on the facts of your situation. Also, the main exemption that applies to commissioned employees only exempts them from overtime (not rest break premiums). So it’s not clear to me that switching to a salary would fully resolve your concerns.
You can read more about California’s exempt employee laws in our article Exempt vs. Non-Exempt Employees: Guide to California Law.
Anyway, I hope this information helps. Please remember that this information does not constitute legal advice and should not be relied on. Nor does it create an attorney-client relationship.
I wish you the best of luck in your situation!