Employment laws and regulations are intended to protect all workers, from low-paying employees to executives. In some cases, higher-wage or salary employees, or commissioned employees, can be exempted from certain legal requirements. In a recent California case, the Supreme Court issued a unanimous decision that clarifies some complexities related to employee commission payment agreements. According to the decision, the existing commission plan set forth by Time Warner Cable did not satisfy the commissioned sales exemption. This decision will render the company liable for unpaid wages.
The Time Warner commission plan required employees meet three conditions before they were paid. Once they earned the commission, the employees were paid on the second paycheck in the following month. The Supreme Court found that this arrangement was in violation of California wage law and the exemption. Our Orange County wage and hour law employment attorneys are dedicated to raising awareness to protect the rights of workers in Southern California and nationwide. We are experienced in the investigation and pursuit of wage and hour violations and will help employee recover the compensation they are due. In addition to representing our clients, we are abreast of developments in wage and hour law and in raising awareness to prevent future violations.
Under the minimum earnings requirement for the commission exemption, “earnings” must be calculated based on the amount of wages “actually paid during the period.” Firstly, the agreement failed to pay employees during each pay period. This policy is not adequate because employees are required to be paid within the period their commissions were earned. The policy also unlawfully allowed the company to reassign wages to other pay periods to satisfy minimum earning requirements. Under California law, the “commissioned sales exemption” only applies to employees who earn at least one and a half times more than the state minimum wage. Employees must also make more than 50% of income from commission.