Is The Minimum Pay Required For Commissioned Employees To Qualify For An Overtime Exemption Increasing In Your State In 2018?
While the minimum pay required for commissioned employees to qualify for an overtime exemption is not changing in 2018, there are several states where the minimum pay requirements for a “commissioned employee overtime exemption” are increasing.
These increases (i.e. in California, Colorado, Minnesota, Oregon, Washington, and Washington DC) are occurring because the pay an inside or commissioned salesperson must receive to qualify for the inside or “commissioned” sales exemption (as established under state law) are scheduled to increase in 2018 (December 31st for New York employers).
Under the Fair Labor Standards Act (FLSA), in order for a commissioned salesperson to qualify for the FLSA’s 7(i) overtime exception (Commissioned Salesperson Exemption), the following three conditions must be met:
- The employee must be employed by a retail or service establishment, and
- The employee’s 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, and
- More than half the employee’s total earnings in a representative period must consist of commissions.
Unless all three conditions are met, the Commissioned Salesperson Exemption is not applicable, and overtime premium pay must be paid for all hours worked over 40 in a workweek at time and one-half the regular rate of pay.
The below table sets forth the changes to the minimum salary requirements for exempt employees in these states. In those instances where the state minimum salary requirements are lower than the above-listed FLSA requirements, the higher salary threshold applies for employers who are subject to FLSA in order for employees to qualify for an exemption under the FLSA. Read more