Hourly Employees Paid On A Commission Basis Must Be Separately Compensated For Their Rest Periods Featured

  04 March 2017

In Vaquero v. Stoneledge Furniture, LLC, a California Court of Appeal ruled that hourly employees paid on a commission basis must be separately compensated for their rest periods.

In the Stoneledge case, the employer kept track of hours worked and paid hourly sales associates on a commission basis. If an employee failed to earn a minimum amount in commissions of at least $12.01 per hour in commission pay in any pay period, then the employer paid the employee a “draw” against future advanced commissions. The commission agreement did not provide separate compensation for non-selling time, such as time spent in meetings, on certain types of training, and during rest periods. Although employees clocked out for meal periods, they did not clock out for rest periods. Two former employees filed a lawsuit alleging that the employer did not pay all wages earned during rest periods. Stoneledge argued that, “the rest period claim failed as a matter of law because Stoneledge paid its sales associates a guaranteed minimum for all hours worked, including rest periods.” The trial court granted the employer’s motion for summary judgment, holding that, under the employer’s system, “there was no possibility that the employees’ rest period time would not be captured in the total amount paid each pay period.” The employees appealed, and the California Court of Appeal reversed the trial court’s decision, finding that employers must “separately compensate” hourly employees for rest periods when the employer uses an “activity based compensation system” that does not directly compensate the employees for rest periods. The Vaquero decision clarifies that employers with commission-based compensation plans must separately account for and pay for employee rest periods. Read more here.