Court Rules Commissioned Employees Were Properly Classified As Exempt
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- Published on Wednesday, 25 January 2012 05:07
Pursuant to the “commissioned employees exemption” from overtime, employers are not required to pay overtime wages to employees whose earnings exceed one and one-half (1 1/2) times the minimum wage if more than half of that employee's compensation represents commissions. In a recent case involving employees working as senior consulting managers, who claimed they were owed overtime because their employer classified them as exempt from overtime, both the trial court and the court of appeal concluded that the employees were properly classified as exempt under the commissioned employees exemption. The case involved Tyrone Muldrow, who filed suit against Surrex Solutions Corporation (Surrex) on behalf of himself and a class of current and former Surrex employees. In his complaint, Muldrow alleged that Surrex failed to pay overtime and failed to provide meal periods. Surrex asserted that it was not required to pay overtime to because the employees were subject to the commissioned employees exemption.
The trial court determined that the class members were subject to the commissioned employees exemption, that Surrex had properly provided meal periods, and that the current law did not obligate Surrex to ensure that the employees utilized the meal periods. Muldrow appealed contending that the commissioned employees exemption did not apply. However, the appellate court held that the trial court did not err in determining the employees were not entitled to overtime pay, due to the fact that they met the criteria for the commissioned employees exemption because they were primarily engaged in sales, their commissions were based on price, and Surrex's compensation system was a bona fide commission system. The court rejected Muldrow’s various arguments including that "searching on the computer, searching for candidates on the website, cold calling, interviewing candidates, inputting data, and submitting resumes," should not be considered sales-related activities. Read More.