Minimum Wage and Commission Only Employees
Demystifying Minimum Wage and Commissions for Small Business Owners
Navigating minimum wage laws is crucial, even if you have commission-based employees. Learn how federal and state regulations apply, ensuring your team's fair compensation. Discover the ins and outs of minimum wage compliance for your commission-only staff, including recent updates affecting Sunday work rates.
Calculating Minimum Wage Rates for Commission-Only Employees
If your workforce relies on commissions, it's vital to ensure they earn at least $15.00 per hour, calculated by dividing their weekly commissions by hours worked.
Yet, industries with extended sales cycles may face periods where compensation doesn't meet minimum wage requirements. This problem can also arise with a new sales employee who is either in training or does not yet have an established book of accounts.
It is important to address the minimum wage issue to avoid claims of wage and hour violations.
Tracking Work Hours for Commission-Based Staff
Tracking hours worked by sales employees can be challenging, as their income depends on sales, not hours. While assuming a 40-hour workweek is a starting point, accurate documentation of work hours is ideal. Without it, disputes over minimum wage, overtime, and timely payments may arise. Protect your business with proper records.
Best Practices for Small Businesses with Commission-Based Workers
Small business owners can proactively structure compensation plans to meet minimum wage standards. Consider options like a base salary of $12.75 for a 40-hour workweek or providing a guaranteed draw against commissions that aligns with minimum wage. However, be cautious about offsetting future commissions that could fall below minimum wage, and consult an employment attorney for legal guidance.
Documenting Your Commission Plan for Legal Clarity
Inadequately documented commission plans can lead to disputes and legal challenges regarding minimum wage, overtime, and timely payments. Your commission plan should be meticulously detailed, reflecting your business's specific terms and industry nuances. To safeguard your business, consult with an employment attorney to ensure your commission-based compensation aligns with the law.
Empower your small business with the knowledge and strategies needed to navigate minimum wage laws for commission-based employees. Secure your team's fair compensation while protecting your business from legal risks.
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