All Employers with MA Commission-Only Employees
May 8, 2019
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In Sullivan v. Sleepy’s LLC, the Massachusetts Supreme Judicial Court recently stated that retail salespeople who are paid entirely in commissions or draws are entitled to separate and additional overtime or Sunday pay. There, employees who worked more than 40 hours in a week and on at least one Sunday, did not receive any additional compensation beyond their daily draw and commissions. Even though the compensation received always equaled or exceed the minimum wage and overtime and Sunday pay rates, the court stated that this was insufficient. Overtime and Sunday pay laws, as well as Department of Labor Standards’ (DLS) opinion letters, supported its interpretation.
Moreover, employers may not retroactively allocate draws and commissions as hourly wages and overtime pay in order to comply with premium pay requirements. Specifically, to do so would effectively mean the employee was paid the same hourly rate regardless of whether they worked 40 or more hours, which would undermine the purpose of overtime laws.
Additionally, the court defined the regular rate for calculating overtime pay under these circumstances as “at least the equivalent of minimum wage,” deferring to the DLS’s interpretation of applicable statutes. Thus, employers would use the minimum wage multiplied by the 1.5 premium rate. This calculation applies to both overtime and Sunday pay.
- Update pay practices for consistency with this ruling.
- Have payroll personnel trained on the appropriate overtime and Sunday pay calculations.
- Consult with legal counsel to address corrections and potential liability.
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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
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