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BusinessColumnistsCarrie Mason-Draffen

Switch to commission-only pay is probably legal

It is probably legal for an employer to

It is probably legal for an employer to switch an employee from salary and commission pay to commision only. But it means the employee must know the rules for being paid on commission. Photo Credit: iStock

DEAR CARRIE: I have worked for a local company for 17 years and always received both a salary and commission. Recently, my company made me commission only because it said I shouldn't be earning a salary. Is this legal? -- Pay Daze

DEAR PAY: It's probably legal, and I hope your employer let you know months in advance so you could prepare for such a dramatic change.

New York State labor law recognizes commission-only salespeople. It defines a commissioned salesperson as "an employee whose principal activity includes sales and who is paid, in whole or part, on a commission basis."

"As such, paying an individual solely on a commission basis is not in and of itself unlawful," said employment attorney Howard Wexler, an associate at Seyfarth Shaw in Manhattan.

Now is a good time for you to familiarize yourself with labor laws that employers must follow regarding commission-only employees.

"First and foremost, the labor law requires that a commissioned salesperson's employment agreement be in writing and signed by both the employer and the salesperson," Wexler said.

The written agreement must contain such things as a description of how wages, commissions and all other monies will be calculated; how often the employee will be paid, and details regarding payment of wages and other monies owed to a salesperson who leaves the company.

In general, the employer must pay wages according to the terms of the written commission agreement, and must pay the employee at least once a month, Wexler said. And earned commissions must be paid by the last day of the month after the month in which the commission was earned. In other words, a commission earned in March must be paid by the end of April.

In addition, a commissioned salesperson who is nonexempt, which generally means hourly, must be paid minimum wage as well as overtime, the latter of which comes into play when they work more than 40 hours a week.

"If a nonexempt commissioned salesperson's draw [or advance] and commissions do not equal or exceed the amount computed as the minimum wage for the agreed pay period, the employer must make up the difference on the same payday," he said.

Outside salespeople and sales managers are exempt from overtime and even minium wage.

DEAR CARRIE: I earn both vacation and sick time. Can my employer dictate which I have to use if I stay home because of bad weather? I am fortunate that my company pays all employees if it officially closes because of bad weather. But if it opens despite the weather and I choose to stay home, I have to use a vacation day to cover my absence. Only after I exhaust those days can I dip into accrued sick time to cover a bad-weather absence. Is this legal, or should employees be able to decide whether they want to use vacation time or sick time? -- Which Day?

DEAR WHICH DAY: I always feel like the bearer of bad news when employees ask benefit questions. Absent a union contract that says otherwise, your employer can legally stipulate which paid time-off days you have to use first to cover an absence. Labor laws don't require employers to offer benefits, so companies that do can set the terms.

It may not seem like it, but your employer is actually doing you a favor by allowing you to cover a bad-weather absence with paid time off. By law the company doesn't have to pay you when you miss the day. Additionally, you mentioned that when inclement weather forces the company to close, it still pays employees. That generosity is not as common as you may think.

Go to for more on state labor laws and commission employees.

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