There are many matters pertaining to sales commissions that if you find a New York attorney, you can understand more clearly. New York state law defines commission as “compensation based on a percentage of or some other amount based upon a salesperson’s orders or sales.” Under the Fair Labor Standards Act (FLSA), employees covered by the Act who are paid on commission must be paid at least the minimum hourly wage and overtime for work in excess of 40 hours, unless they are exempt. Certain employees of retail and service establishments who are paid on a commission basis in whole or part are exempt from overtime pay regulations. To be exempt, these employees must earn a regular rate of pay that exceeds 1½ times the applicable minimum wage for every hour worked in a workweek; and more than half their total earnings in an average pay period must consist of commissions on goods or services. The FLSA exempts certain securities industry brokers from overtime rules. Outside salespeople who work on commission are exempt from both minimum wage and overtime rules.
If you are a commission salesperson, the New York Labor Law requires your employment agreement to be in writing and signed by both you and your employer. This law applies to an independent contractor as well as an employee. It can be worth your time to find a New York attorney to speak to about this. The employment agreement must include the following:
- A description of how wages, salary, drawing accounts, commissions, and all other monies earned and payable will be calculated;
- How often you will be paid;
- The frequency of reconciliation (if the agreement provides for a revocable draw);
- Any details relevant to the payment of wages, salary, drawing accounts, commissions, and all other monies earned and payable when the employment relationship ends.
How do I know if I am receiving the commission I am owed?
Because New York law requires your commission employment agreement to be in writing, when and how you are paid should be specified in the agreement. However, if your agreement is silent on any required issue, consider the following:
- In New York, a commission is considered earned when you have a person ready, willing, and able to enter into a contract upon the employer’s terms.
- Once you have earned a commission, it is considered your wages and is protected by wage laws. Your employer may only deduct from your wages amounts required or allowed by law (e.g., taxes, FICA, Medicare premiums, insurance, pension, union dues, and similar items).
- Once you have earned a commission, you are entitled to receive it even if you and your employer have terminated your employment relationship. Keep thorough records of commissions you have earned, especially if will be leaving your job soon.
- In the absence of specific, written agreement stating otherwise, if you receive a draw against your commissions, you cannot be made to repay them if you have left your job and your earned commissions don’t exceed the draw.
I think I am not receiving my commissions how do I find a New York lawyer to help with this?
- Act quickly–you have a limited time to file an FLSA complaint or breach of contract claim.
- Gather any documents relevant to your claim, including your employment agreement and paystubs.
- Consult an experienced employment lawyer. An FLSA consultation is free.
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.