Help Wanted: Commission cut may be legal

A cut in commission pay may be legal

A cut in commission pay may be legal if it abides by your written commission agreement and by overtime regulations, providing you are eligible for overtime. (Credit: iStock)

Carrie Mason-Draffen

Newsday columnist Carrie Mason Draffen Carrie Mason-Draffen

Mason-Draffen, a business reporter, writes a column about workplace issues.

bio | email

DEAR CARRIE: I work for a major retailer. My normal workweek is 35 hours, and I earn commissions. When I am forced to work more than 40 hours a week, the company cuts my commission in half. Is this legal? -- Commish-ery

DEAR COMMISH-ERY: Your company's action is legal if it abides by your written commission agreement and by overtime regulations, providing you are eligible for overtime. If you're a nonexempt employee, which generally means hourly, you have to be paid overtime when you work more than 40 hours a week.

"If the employee is nonexempt and receives proper overtime compensation, and as long as there is a proper written commission agreement in place, it could be lawful for an employer to implement varying commission rates depending upon the number of hours worked," said Ellen Storch, an employment attorney at Kaufman Dolowich Voluck & Gonzo in Woodbury.

And as if the cuts weren't unkind enough, depending on how much you earn in commissions and salary, your overtime pay could be limited. Generally federal labor law requires nonexempt employees who work more than 40 hours to be paid at least one and one-half their regular hourly rate for those extra hours. But that law has exceptions, and one applies to commission salespeople:

"If more than half of an employee's total compensation for a representative period represents commissions, and that person's regular rate of pay is at least time-and-a-half the minimum wage, he or she would be exempt from additional overtime premium pay," said Irv Miljoner, who heads the U.S. Labor Department office in Westbury.

And if you are an outside sales person, you wouldn't even be eligible for overtime at all. "If the person is an outside sales person, as defined in the regulations, he or she would be exempt from minimum wage and overtime provisions, assuming their primary duties are sales activities away from the establishment," Miljoner said.

I'm guessing your employer cuts your commission to save money. But its strategy seems like a poor choice if it wants to motivate you to sell more. And what company wouldn't want a highly motivated sales force?

DEAR CARRIE: My son works as a swim instructor at a private facility. He gives individual lessons every half-hour between 10 a.m. and 2 p.m. If a student doesn't show up he does not get paid for that half-hour. I would like to know if that is legal. -- Fishy Docking?

DEAR FISHY: It depends. If he is free to leave during his unexpected free time, the facility doesn't have to pay him. On the other hand, if the business requires him to stay put, it has to pony up for wages.

"If he has to be on premises or any specified place and is not free to come and go, then they have to pay him for the time," said Miljoner of the U.S. Labor Department.

So even if a supervisor casually tells your son to hang around in case someone is running late but in the end the person is a no-show, the business has to pay him for what is known in labor law as being "engaged to wait." That time is considered hours worked.

Even if your son has the freedom to read a book during that half-hour when no one shows up, or surf the Web, if he is tethered to the premises because of company policy, he still has to be paid.

"Whether he is teaching or training or not, he still has to be where they want him to be, so they have to pay him," Miljoner said.