Most people are familiar with the term commission. In certain jobs, especially sales jobs, the compensation arrangement typically includes commission pay. An employee may receive a salary, or some level of guaranteed base pay, but the commission pay over and above that, is dependent on how many goods/services the employee sells. Commission plans vary by company and position, but the underlying premise is the same. Performing at a high level and selling more equals more money in that employee’s pocket.
Seems straightforward, but we have encountered many questions from employees over the years about their commission. Let’s take a look at some of them.
- I had a rough week with low sales and made very little commission. Is there a minimum my company has to pay me?
Yes, there is. A Fair Labor Standards Act (FLSA) was first introduced in 1938 to protect workers. It had laws regulating child labor, setting the number of maximum weekly work hours, and establishing a minimum wage. Obviously, laws have evolved since then, but your company is required to pay you the current minimum wage when your weekly pay is averaged by the number of hours you worked. The minimum wage is currently $11.00 per hour in Illinois.
For example, let’s say that during your rough week, your commission averages only $5.00 per hour you worked. Your employer must pay you an additional $6.00 per hour to make up the difference between that and the minimum wage.
- My employer and I agreed that they would pay me commission but now I’m not getting paid. Now what?
Do you have a clear agreement with your employer about commission pay? Is the rate of commission in writing? If so, your first step is to notify your employer in writing that you aren’t receiving your commission as promised. If your employer does not comply, the next step would be to contact an attorney. Illinois has a law that ensures employees seeking their unpaid commission will be reimbursed for their attorney’s fees. The lawyers we recommend for these cases never ask for a penny up front and only get paid if they make a recovery for you.
- I earn commission, and I worked 55 hours last week, but my company did not pay me overtime. Do they have to?
That depends on a few things. Are you an inside or outside salesperson? If you spend more than half your working hours making sales outside of a central office, you are an outside salesperson and don’t qualify for overtime. If you are an inside salesperson, you still may not be eligible for overtime if you work in a retail or service establishment, if your pay rate is higher than 1.5 times the minimum wage (i.e., $16.50 in Illinois) and if over half of what you earn comes from commission.
Are you in a similar situation? Or do you have a question that is different from the ones above? Do you just want to speak to a lawyer for free? Whatever your situation, you are welcome to contact us any time at 312-346-5320 for a confidential consultation.