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i have a hair salon, and have employees that get paid 50% commission,

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we deduct the taxes and...
i have a hair salon, and have employees that get paid 50% commission, we deduct the taxes and give them a check per week, they only get paid by commission witch is $13 dlls per hair cut and we don't pay them hourly, they are required to be there at least 4 to 5 days a week and 5 to 6 hrs daily, i didn't know that i have to pay them at least the minimum wage when they didn't make enough in that week, for example we have 8 hair stations and we have 7 hairdressers waiting for customer there has been weeks where it was really slow and they made like 50dlls in that week working 5 hrs daily and they would be allow to leave if it was slow, but i wasn't aware of this rule of paying minimum wage even if they were commission base only, most of them are gone and i only have 2 that have been with us since we open 9 months ago, it was been hard on me as the rent is high and we really haven't make any profit yet, we barely make it to pay all the bills and i was afraid that this 2 employees might complain of not making at least the minimum wage, and stay there just waiting for customers without getting paid, i always told them that I'm flexible and they can leave if it is slow but it was them the ones to wanted to stay to see if more customers will walk it, now that i know i want to pay them
by commission and if they made less than the minimum wage pay the difference and if they made more with commission that will be good, but I'm afraid that they might find out that i was not doing it right by been ignorant and want to get retroactive pay, for the last 9 months that they didn't make at least the minimum wage, and i would be liable to pay them for all that time witch i don't have the money as I'm struggling with this business what could happen, could a be in trouble, we have a good relationship and i don't think they will complain, but what about the others in the future if they realize that they didn't make enough before, how should i handle it, now i will pay them witch ever is grater, but I'm so sad that i was ignorant in the current law. and i want to do the right thing what is your advice? is it legitimate that i paid them only commission even when there were weeks that they only made $50 to $130 a week witch was less than the minimum wage?
Submitted: 6 years ago.Category: Employment Law
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9/27/2011
Employment Lawyer: Allen M., Esq., Employment Lawyer replied 6 years ago
Allen M., Esq.
Allen M., Esq., Employment Lawyer
Category: Employment Law
Satisfied Customers: 19,431
Experience: Employment/Labor Law Litigation
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Thank you for using Just Answer. Between my law practice and other law related jobs, I have over 13 years experience. I look forward to assisting you.

No, it is not legitimate that you paid them less than minimum wage during any week. I certainly understand your not being informed on the law of commission properly. I can see how that happens and don't think that you did anything intentionally wrong. That still doesn't make it legitimate or legal.

All you can do is make things right as soon as you are able to do so. Start by immediately paying them correctly, meaning that you pay them the difference when they don't make minimum wage and overtime when they work more than 40 (if they ever do).

As for paying them back pay, technically you legally owe it and if they contacted the Department of Labor, you'd have to pay it back (looking back two years). I can understand being concerned about that, but waiting to pay them correctly now only makes the matter worse.
Allen M., Esq.
Allen M., Esq., Employment Lawyer
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Customer reply replied 6 years ago
ok i will from now on pay the difference, but most of the other hairstylist are gone and they never new that they needed to be paid more if they didn't make enough, and all of them agree when i hired them to be commission only, could they come back and demand the money from the past even if they left in good terms? could i make a deal with all of the new ones to get paid the difference but sing a release form?
can i make something legal to help me, as i have been only open for 9 months and it has been hard on the business, what about if we close down and go into bankruptcy can we be liable of all the past wages for all the old and new employees? also i never did the payroll i sent the number of haircuts to may accountant and he did the checks but he didn't ever told me about minimum wage, as he also agree it was commission only. and he will just add the number of hair cuts and tips to each employee and make checks, i'm so afraid that this could make
me liable of money that i dont have, and how will they force me to pay?
Employment Lawyer: Allen M., Esq., Employment Lawyer replied 6 years ago
Yes, they could come back (for a period of two years) and file a complaint with the Department of Labor. It doesn't matter that they agreed to commission only or that the left on good terms. The rule is set and they are not allowed to legally waive it.

You have to pay them the difference, so you can't legally require them to waive their rights to the Department of Labor in return for something you already legally have to do. You wouldn't technically be giving them anything, so the release would be void.

If you go into bankruptcy, the first debts they are going to come after you concerning will be pay for your employees. If you shift your assets to other debts first, they will penalize you for that.

Your accountant is not an attorney and is not legally liable in the way that you are as the business owner.

They would force you to pay through a judgment enforceable against your accounts and assets. This is the government, so they are very capable at extracting funds when necessary.
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Customer reply replied 6 years ago
ok i know several when to other cities and they are no longer living here, if the ones that are working with us, wich is 2 old employees complain can the department of labor contact all the other ones asking
to provide information because they are entitle to get paid from the last months when they worked with me?
or we only have to pay to the ones that complain or can the deparment of labor do an investigation? or what about if nobody complains and we just move on and learn from this experience, or should i be the one that contacts the department of labor and telling them the true and my ignorance?
Employment Lawyer: Allen M., Esq., Employment Lawyer replied 6 years ago
The DOL will not generally contact other former employees to tell them that they may have a claim. They would just investigate the claim before them.

I wouldn't contact the Department of Labor. Just start paying them correctly. If you want to chance not getting caught, you can do that and hope that the two years passes. If not, just pay them directly over time. Call in your employees and say "listen gang. I checked this out and we need to pay you differently. The law is confusing, but we've got it right now and I'm going to be paying you back the difference over the next few months."

They'll be so happy they won't bother contacting the DOL.

You don't want the DOL looking over your stuff, because they can legally assess charges for any violation that they see, which might be more than what we're just talking about here.
Allen M., Esq.
Allen M., Esq., Employment Lawyer
Category: Employment Law
Satisfied Customers: 19,431
Experience: Employment/Labor Law Litigation
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Customer reply replied 6 years ago
ok where can i find more information on this like examples of previous cases, and how the department of labor operates to similar cases to mine. and if it works wit the IRS, i want to be more inform, and lets say one employee do complain how long it takes for them to investigate and what will be the steps?
Employment Lawyer: Allen M., Esq., Employment Lawyer replied 6 years ago
You'd have to find Department of Labor decisions, which are located in a local law library. They just don't post those freely on line.

They don't work directly with the IRS, but nothing stops them from making a call to them.

It can take around 6 months for the investigation, from start to finish. Someone complains, the DOL makes contact, they do some discovery, they list charges and ask for your defense, they rule on the defense and allow you to appeal, then they issue a final judgment and you pay.
Allen M., Esq.
Allen M., Esq., Employment Lawyer
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