Wage violations are common within the retail and sales industries. As a retail sales worker or sales representative, it is important that you understand your entitlement to minimum wage and overtime pay under the Fair Labor Standards Act (FLSA).
What Retail Sales Workers Need to Know About Overtime Pay and Minimum Wage Laws Under the FLSA
Retail sales employees are often subjected to poor pay—including unpaid overtime and off-the-clock work. Employers also often use exemptions as a method to avoid paying overtime to certain employees.
Understanding Retail Sales Exemption
As a sales employee, whether you are truly exempt is dependent on the following three conditions:
- You must be employed by a retail or service establishment.
- Your regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked.
- More than half of your total earnings in a representative period must consist of commissions.
If these three conditions are not met, the retail exemption is not applicable and you are entitled to overtime pay.
Other Illegal Pay Practices in Retail Sales
There are many other common ways that employers try to get out of paying their employees their rightful pay. The following are a few examples:
- Working off-the-clock. Your employer should always pay you for the time you work. This includes training and seminars, as well as regular work time.
- Altering records of hours. Your employer is required to maintain accurate records of the hours that you work each workday and workweek.
- Using the tips in commission calculations. Tips paid by customers to service employees must never be classed as commission.
If you work in retail sales and you believe you are being improperly classified under the retail sales exemption or feel you have a possible claim due to unpaid commissions or overtime, you need to speak with a payroll attorney immediately.
What Sales Representatives Need to Know About Overtime Pay and Minimum Wage Laws Under the FLSA
Many sales agents work in a sales office, cold-calling from a phone list or contacting interested buyers. Some sales employees go door-to-door to make sales or travel extensively for their job. Often employers will try and tell sales representatives that they are exempt, or that since they are paid a salary they cannot receive overtime. This is not the case. It is important that you understand the difference between inside and outside sales representatives because it affects your paycheck. The following is important information for any sales agents to understand:
- Inside sales employees and the FLSA. Inside salespersons work on-site at their business location, selling products, making cold calls, and following up on leads. Inside sales representatives are normally entitled to commissions on the sales they make, minimum wage, and time-and-a-half for overtime hours.
- Outside sales employees and the FLSA exemption. Outside salespersons do not typically spend their working hours at a particular business location. They may make calls and follow leads, and many will also have to go and meet many of those leads. Outside sales employees may also sell products or services from a booth or stall, or door to door. There is an exemption in the FLSA that applies to outside sales employees, which makes them ineligible for minimum wage and overtime pay.
Understanding Misclassification as an Independent Contractor
Another situation that can adversely affect you is misclassification as an independent contractor rather than an employee. There are significant differences that can affect your wage entitlement and your responsibilities under the FLSA. The following are a few examples:
- Independent contractor. As an independent contractor you are self-employed and subcontracted to work for a particular company. You are responsible for paying your own FICA taxes, keeping track of your expenses, and any equipment you use for your work. You are not paid overtime pay because you are paid fixed rates for the work, paid for work done during certain hours, or paid for a certain number of hours worked per week. You are not entitled to overtime pay, vacation time, sick pay, or health benefits.
- Employee. As an employee, you are supervised on the job that you perform and often given instructions while you work. You have payroll taxes taken out of your paychecks and you are entitled to overtime pay—even if you work for a salary. You are entitled to vacation time and sick days. You are also legally entitled to health benefits if the business has more than four employees.
How the Law Applies If You Are an Independent Contractor or an Employee
The law looks at several criteria when determining whether you are an employee or a contractor:
- How much control the employer has over how and when the job is done.
- Whether the profit opportunity or loss depends on your management skills.
- If you work from the job location.
- Whether your duties are performed for the employer's benefit on an ongoing or permanent basis.
- How much investment you have in the tools and equipment you use to do your job.
- Whether your work is an integral part of the employer's business.
If you are a sales agent and you believe your employer owes you commissions, overtime or back pay, or that you are a misclassified sales person, you need an attorney who specializes in Fair Labor Standards Law, who can advise you on how to file a wage dispute claim against your employer.
Whether you are a retail sales worker or a sales representative, if you feel you are not being paid the fair salary you are entitled to, contact one of our wage attorneys today at 855-947-0707 or send us a confidential message to make sure you are being paid every cent you earn. You can also order our free guide, The 10 Biggest Mistakes That Can Hurt Your Wage and Overtime Claim to start learning more about your claim.