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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
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When a Sales agent works on a sale for duration of 3 days,

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When a Sales agent works on a sale for duration of 3 days, then closes the sale on the 3rd day and is entitled to receive a commission of $200.00, does this amount earned covers all three days of work, or is he entitled for the minimum pay of $56.00 for first two days he was not closing any sales due to the fact that he was fully occupied by working on the sale he closed on the 3rd day?
Submitted: 2 years ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 2 years ago.
Hello and thank you for entrusting me to answer your question.

As a commission employee, the total pay for each pay period divided by the number of hours you work must average at least the minimum hourly wage rate, which in the state of California in $8.00.

An employer does not need to average each day separately, so if an employee earned a $2,000 commission on the last day of work in the pay period but no other commission during the rest of his pay period, the employer would not have to reimburse the employee to account for miniumum wage unless the $2000, divided by the number of hours of work, totaled less than $8.

I sincerely XXXXX XXXXX this information helps you and I wish you the very best of luck. Bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.

Please abide by the honor code of this website by kindly clicking on the GREEN ACCEPT button if my answer has been helpful to you. Thank you very much.
Patrick, Esq., Lawyer
Satisfied Customers: 7651
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.
Thank you for the answer.

Is this according to a federal law or also according to California law?

Expert:  Patrick, Esq. replied 2 years ago.
Both state and federal law require these things under separate pieces of legislation. I'm very glad I could assist you and thank you for the accept.
Customer: replied 2 years ago.
Sorry, I did not understand your latest answer. Could you please clarify that this statement is a law in California: "An employer does not need to average each day separately, so if an employee earned a $2,000 commission on the last day of work in the pay period but no other commission during the rest of his pay period, the employer would not have to reimburse the employee to account for miniumum wage unless the $2000, divided by the number of hours of work, totaled less than $8."

Thank you so much
Expert:  Patrick, Esq. replied 2 years ago.
Of course, and sorry for the ambiguity.

What I was trying to say is that the "averaging" of the hourly pay takes into account all hours within a pay period. Days are not averaged individually.

For example, if you work 8 hours one day and earn no commission, you wouldn't "average" that day by itself, because the average pay would of course be zero. You average all pay earned within the pay period by all hours worked within the pay period. So, if at the end of the pay period, the total commissions earned during that period averaged by the number of hours worked in that period totals less than $8/hr, you would be entitled to reimbursement up to that amount.

I hope that this helps clarify. If not, I am happy to continue providing clarification.
Patrick, Esq., Lawyer
Satisfied Customers: 7651
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.
Can you please also clarify if this applies only to independent contractors or to permanent employees in California as well?
Expert:  Patrick, Esq. replied 2 years ago.
The laws governing minimum wage and commission structures relating to minimum wage only apply to employees.

However, simply because a worker is classified as an independent contractor does not mean that they actually ARE one.

Typically, California's Division of Labor Standards Enforcement (DLSE) will start with the presumption that a worker is an employee. (Labor Code Section 3357) This is a rebuttable presumption however, and the Court's actual determination of whether a worker is an employee or independent contractor depends upon a number of factors, all of which must be considered, and none of which by itself is controlling.

For most matters, the DLSE will apply the "economic realities" test that the California Supreme Court adopted in S. G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989) 48 Cal.3d 341. The most significant factor that S. G. Borello & Sons considers is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. Additional factors that may be considered depending on the issue involved are:

1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
2. Whether or not the work is a part of the regular business of the principal or alleged employer;
3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
4. The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
5. Whether the service rendered requires a special skill;
6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
7. The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
8. The length of time for which the services are to be performed;
9. The degree of permanence of the working relationship;
10. The method of payment, whether by time or by the job; and
11. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.

Even where there is an absence of control over work details, courts may find an employer-employee relationship if (1) the principal retains pervasive control over the operation as a whole, (2) the worker’s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary. (Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288)

So, to summarize my very long response to your simple question, an independent contractor would not be entitled to a reimbursement if their commissions did not equal minimum wage because IC's are not entitled to minimum wage. That said, just because a worker is labeled as an IC doesn't mean the DLSE will treat them as such. A worker is only an IC if they satisfy the criteria stated above.

Again, I sincerely XXXXX XXXXX this information helps you and I wish you the very best of luck. Bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.

Please abide by the honor code of this website by kindly clicking on the GREEN ACCEPT button if my answer has been helpful to you. Thank you very much.
Patrick, Esq., Lawyer
Satisfied Customers: 7651
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you

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Patrick, Esq.
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