Retail salespeople paid on a 100-percent commission basis were entitled to separate additional payments at one and a half times the minimum wage for overtime and Sunday hours, the Supreme Judicial Court has decided.
The plaintiffs, who worked as salespeople for the defendant mattress sellers Sleepy’s and Mattress Firm, received as daily pay the greater of $125 drawn against future commissions or earned commissions exceeding $125.
When the plaintiffs worked more than 40 hours in a week or on Sunday, they did not get paid extra. But their commissions and advances were always at least equal to the minimum wage through 40 hours plus time-and-a-half in excess.
The defendants argued that that pay structure satisfied the commonwealth’s overtime and Sunday pay statutes, as the plaintiffs received all compensation legally owed them and because their claims were offset by other compensation.
But the SJC, ruling in response to certified questions from the U.S. District Court, disagreed. Additionally, the court found that employees’ draws and commissions could not be allocated retroactively as hourly and overtime wages or Sunday pay.
“We reach this conclusion based on the language and purposes of the overtime statute, the regulatory guidance, and our previous case law establishing that, in most circumstances, employers may not retroactively reallocate and credit payments made to fulfill one set of wage obligations against separate and independent obligations,” Justice Scott L. Kafker wrote for the court, explaining that the employers’ interpretation would contravene the purpose of the overtime and Sunday statutes by incentivizing them to have employees work more than a 40-hour week and discouraging them from hiring more workers.
The 21-page decision is Sullivan, et al. v. Sleepy’s LLC, et al., Lawyers Weekly No. 10-085-19. The full text of the ruling can be found here.
Read the full story at Retailers must pay OT to commission-only salespeople – Massachusetts Lawyers Weekly