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socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 39139
Experience:  Retired (mostly)
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Can an employer pay you a base of min. wage weekly then collect

Customer Question

Can an employer pay you a base of min. wage weekly then collect all weeks past when your commissiion is ewaned? We are California Realtors working part time hours for a timeshare company. They paided us $12.50 hour for the first 45 days. Then we were to move to straight commission, once we earned commissions they repay themselves 100% of our draws from commissions then if there is any balance we then receive it. My understanding is if you are required to hang your realtors license with them and they control your works hour, such as start time,lunch & ending time we should be paid minimum wage. We are paid on a W2 status
Submitted: 6 years ago.
Category: California Employment Law
Customer: replied 6 years ago.
Relist: Other
I didn't feel that I was getting a correct answer as she didn't relate to the DOL issues of inside sales vs outside sales.
Expert:  socrateaser replied 6 years ago.
Hello,

An employee can be paid on commissions, without regard to federal overtime regulations, if the employee is paid at least one and one half times the minimum wage. Title 29 U.S.C. § 207(i). You were apparently paid $12,50 per hour, which is more than one and one half times California minimum wage ($8.00). However, this exemption only applies to an "employee of a retail or service establishment...." A timeshare business is not a retail or service establishment -- therefore the exception from the overtime laws is inapplicable, and you are entitled to the $12.50 per hour.

Now, you are also discribing a situation where the timeshare employer apparently contends that your pay was an "advance" against commissions. The question is whether or not those commissions were earned during the month that you were paid the $12.50 per hour. Even if the commissions were earned during that period, your advance would have had to have been "against" the commmissions to be lawful. See Steinhebel v. Los Angeles Times Communications (2005) 126 Cal.App.4th 696, 705. Instead, you were paid a flat $12.50 per hour, which is entirely inconsistent with the notion that you were being paid an advance against commissions.

Pursuant to Cal. Labor Code 221, it is unlawful to recover payments against an employee's pay already received (except for a true advance against commissions). Therefore, the employer is violating California law, and you are entitled to your $12.50 per hour for the first month's work.

If there are multiple employees who have been subject to this apparently unlawful act, you can file a BOFE claim for everyone involved at this link. If you want to make the claim only for yourself, then see this link.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!


Customer: replied 6 years ago.
OK understand the first part, they say it's not when you earn it ,it's when it's payable as there is a seven day right to rescind , then it takes them another 7-10 days(working) before we earn it. So in this case it went against my draw which started after the 45 day of hourly pay. They switch us to draw against commission after the first 45 days so your pay drops to $8.00 hour as a draw against commissions. But with the restrictions of the company telling us when and how long to work it seams as if they are in control of our min. wage and if they want us to work longer it's solely up to them which means are draw balance goes up based on them. Then they deduct the draw from our next commission check. They always make sure they are running one week behind on payroll so that we always have one week of clear payment of min. wage from the prior weeks check , as they don't touch that against the draw. Another question as an inside sales person , I made $842.00 in hourly pay for the month and $288.00 in commissions for August but not paid until Sept for commissions, which then they deducted the draw balance which was one weeks pay after month end $227.00 from the commission and paid the difference, so the $288.00 wasn't even half of my monthly income earned. Don't they have to pay the commission separate or are they allow to recoup all the draw pay plus dictate the time and hours we work? It seams wrong but maybe it's legal??
Expert:  socrateaser replied 6 years ago.
The entire concept of being paid by the hour is antithetical to the idea of being paid on commission.

If you are being paid an hourly base, then you're entitled to that base no matter what happens with your commissions. Nothing can be deducted from that base payment (other than payroll taxes, of course). If you're also being paid commissions, and some portion of that is an advance, then that advance can be recovered from future commissions due -- but not from the base.

In short, if the base and commissions (earned or advanced) are not being kept entirely separate, then the employer is violating the labor code and the Fair Labor Standards Act.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

socrateaser and other California Employment Law Specialists are ready to help you
Customer: replied 6 years ago.

So if I understand there can't be 100% commissions if in the meantime they are paying us minimum wage ? As they are saying they are paying us minimum wage so we can cover our benefits and we are a W2 but on 100% commission. They say they have the right to collect all moneys given to us until we earn commission and then we must repay them.

 

If I am understanding you that because they are paying minimum wage during the time we're working they can't recover this once we earn commissions? We are inside sales agents and sell the timeshare to the clients they bring in, but if we were outside sales they wouldn't have to pay us anything as a base. But since we are inside they are required to pay a minimum wage to protect themselves.

Expert:  socrateaser replied 6 years ago.

So if I understand there can't be 100% commissions if in the meantime they are paying us minimum wage ?


A: Correct.


As they are saying they are paying us minimum wage so we can cover our benefits and we are a W2 but on 100% commission. They say they have the right to collect all moneys given to us until we earn commission and then we must repay them.

 

A: BS.

If I am understanding you that because they are paying minimum wage during the time we're working they can't recover this once we earn commissions?


A: They can recover from future commissions -- not from wages.


We are inside sales agents and sell the timeshare to the clients they bring in, but if we were outside sales they wouldn't have to pay us anything as a base.


A: Correct.


But since we are inside they are required to pay a minimum wage to protect themselves.

 

A: Correct. The employer can reduce your earned commissions by deducting previous advances against earned commissions, not by deducting advances against previously paid hourly wages, because "wages" cannot be recovered by the employer, per Labor Code 221.


Hope this helps.