Understanding Minimum Wage and Overtime Laws for Commission-Based Employees in Massachusetts
Wage and Hour Laws for Commission-Based EmployeesEmployers often overlook the implications of minimum wage and overtime laws when it comes to commission-based employees. In Massachusetts, it's crucial to be aware of these regulations to ensure fair compensation and compliance with the law.
Minimum Wage Laws Apply WeeklyMassachusetts mandates a minimum wage of $15.00 per hour for most employees. While commission-based employees may earn well above this threshold overall, the law requires them to be paid at least the minimum wage for each hour worked on a weekly basis. This becomes particularly relevant during periods of low sales or for new salespeople experiencing delays in commission earnings.
Overtime Laws Still MatterIf commissions constitute the primary or dominant form of compensation, employees may not be exempt from overtime laws. Even if they are primarily salaried, non-exempt duties require overtime payment for any hours worked beyond 40 in a week. Massachusetts case law emphasizes that this determination cannot be based on overall compensation, highlighting the importance of adherence to weekly overtime regulations.
Draw Against CommissionsTo mitigate the risk for commission-only employees, some employers implement a "draw against commissions" structure. This involves paying a set amount covering at least minimum wage, deducted from future earned commissions. While this helps ensure minimum wage compliance, caution is needed to avoid potential legal issues arising from the draw being considered an unlawful wage deduction. A safer approach is to start with a minimum wage base and add commissions, managing the overall expense without risking employment law violations.
ConclusionUnderstanding and navigating Massachusetts' minimum wage and overtime laws for commission-based employees is essential for both employers and employees. By proactively addressing these regulations, businesses can create fair compensation structures that align with legal requirements, fostering a positive and compliant work environment.
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Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as a Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year. She has written a book on employment law: Rules of the Road, What You Need to Know About Employment Laws in Massachusetts, and helped thousands of clients on both the employee and employer side with issues relating to wage and hour laws, including overtime pay, late or unpaid wages or commissions, employee misclassification, and retaliation against employees asserting rights under the wage and hour laws.
Rebecca Rogers: Rebecca is a 2006 graduate of Boston College Law School, and has worked with slnlaw since 2013. She previously worked as an intellectual property litigation attorney for Fish & Richardson in Boston, Massachusetts, and clerked for the Massachusetts Supreme Judicial Court. Rebecca has helped clients with wage and hour disputes, including employee misclassification, late or unpaid wages or commissions, retaliation under the Wage Act, and advice to both employees and employers about wage and hour law compliance.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna has helped clients assess their rights under the wage and hour laws, including employee misclassification, untimely payment of final wages, late or unpaid commissions, retaliation, and advice to small business owners about wage and hour law compliance.
Elijah Bresley: Eli is a 2014 graduate of Seton Hall Law school, and has worked with slnlaw since 2020. He previously worked for a boutique employment law firm outside of Boston, and then for the Labor and Employment department of a large Boston firm. He also spent a year clerking for the judges of the Superior Court in Hartford, Connecticut. Eli has helped clients with wage and hour claims, including late or unpaid commissions, retaliation, employee misclassification, and overtime, and litigated these claims in state and federal courts. He also advises employers about employment policies and wage and hour compliance.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped clients with multiple wage and hour issues, including retaliation, misclassification, and late or unpaid wages or commissions, and litigated these claims in state and federal courts.
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Our expertise empowers employers to understand and implement compliant compensation structures for commission-based employees in Massachusetts. Navigate minimum wage and overtime laws seamlessly with our guidance, fostering a fair and legally sound work environment. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
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