SALESPERSONS
This page provides general information on the exemption from overtime pay for salespersons.
California law requires that most commissioned sales employees in California be paid at least minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 8 hours in a day or 40 hours in a workweek.
However, the IWC Wage Orders provide an exemption from overtime pay for salespersons who meet certain tests regarding their job duties and who are paid a certain amount.
Job titles do not determine exempt status. In order for the exemption to apply, an employee’s specific job duties and compensation must meet all the requirements summarized below.
There are two types of sales persons in California that may be exempt and, thus, not entitled to overtime:
Outside salespeople are exempt from overtime, but only if they meet the following definition of outside salespeople:
- You must be over 18 years old;
- Your primary duty must either making sales or obtaining orders/contracts for which a client or customer will pay;
- You must usually work away from your employer's place of business and at the customer's place of business or home, selling tangible or intangible items, and
- You must spend more than 50% of your time doing these "outside sales" duties; and
- You receive commission-based compensation.
and
Inside salespeople are exempt from overtime, but only if they meet the following criteria:
- You must work in the retail or service establishment and principally engaged in selling (i.e., over 50% of the working hours)
- Your regular rate of pay is more than one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked ($480 per week for an employee who actually works 40 hours each week ($2,080 per month or $24,960 per year).; and
- More than half of your total earnings consist of commissions.
Unless all of these conditions are met, overtime must be paid by the employer.
DID YOU KNOW:
- Mortgage loan officers, stockbrokers and other types of commissioned sales jobs in the financial sector are not exempt under the Sales exemption.
- Inside sales representatives are still entitled to rest and meal periods or premium compensation.
- If you receive a set amount of money for each item you sell, no matter how much you sell it for, these wages are NOT commissions under California law. These types of wages are considered along the lines of a "bonus" in California, not "commissions". So, any wages an employer calls "commissions" that do not meet this test cannot be counted towards the 50% commissions threshold.
- If you are an independent contractor who works for a manufacturer, jobber, or distributor and you are paid a commission you may be entitled to three times your damages under the Independent Wholesale Sales Representatives Contractual Relations Act of 1990
For more information about Salespersons see Opinion Letters from the California Division of Labor Standards Enforcement:
If you do not satisfy any of the above criteria, you might be entitled to thousands of dollars in unpaid wages, including waiting time penalties. Please call our office at (310) 277-2323 or contact us online for a free consultation
Let us help you recover the wages and benefits you are owed.
