Most workers in the Sunshine State are usually paid on an hourly basis. It is important to note that there are various ways to be compensated.
Some employees are paid a salary, which means that they are paid a fixed amount irrespective of the number of hours they work. Some workers earn a base wage and also get extra revenue via tips, while some employers compensate employees on a commission basis.
A commission is a payment provided to a worker after they wrap up a service or assignment for a company. This is a predetermined portion or flat fee deducted from the company’s profits. If you’re paid straight commission, it is the only monetary compensation you will earn; you won’t be receiving a base salary or hourly wages.
Have in mind that individuals who are employed for commission or tips are excluded from the requirement of minimum wage.
Most often, employers are expected to pay tipped or commissioned employees overtime for work exceeding 40 hours per week. Note that when an employer of labor is disregarding or does not comprehend the law regarding minimum wage, employees may not be receiving the compensation they merit.
6 Most Important Florida Labor Laws for Commission Only Employees
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The FLSA Exemption for Commission-only Employees
The statute that holds true to commission-only employees is classified as the 7(i) exemption because it is situated in section 7(i) of the Fair Labor Standards Act (FLSA). Note that only when all three of the guidelines provided in the section are met does a 7(i) exemption from the obligatory payment of overtime apply:
- The workers are working in a sales or service organization.
- The employee’s standard rate of pay (which include commissions) is one-and-a-half times the minimum wage during the workweek when the individual is working overtime.
- The commissions or tips go past over half of the employee’s income in an employer of labor-defined “representative period.”
Nonexempt Commission-only Employees
A nonexempt commission-only employee in the sunshine state is a commission-only employee that meets the FLSA minimum wage or 7(i) exempt requirements. Interestingly, nonexempt commission-only employees are expected to receive:
- The federal or state minimum wage, whichever is higher, must be met. Since the state minimum wage in Florida is $10.00 per hour, it is more than the federal minimum wage of $7.25 per hour. As a commission-only employee in the sunshine state, you have the right to the state minimum wage.
- If they work more than 40 hours per week, then they are eligible to be paid overtime.
Inside Commission-only Employees
An inside salesperson is more or less a worker who works in a retail store or on their assigned business premises. If you are an inside salesperson, have in mind that you are considered exempt from overtime pay requirements in Florida. Under Florida labor laws, commission-only employees are eligible for minimum wage. If you meet the following criteria, you are excluded from overtime pay:
- Your salary, plus commissions, is noted to be more than one and a half times the minimum wage.
- Commissions account for more than half of your total sales revenue.
Outside Commission-only Employees
A good number of commission-only employees are exempted from overtime pay laws. If you are a commission-only outside employee in the sunshine state, you are excused from FLSA laws such as overtime pay and minimum wage.
The Florida labor laws for commission-only employees consider anyone who works outside the employer’s premises to be an exempt employee, whether you sell to people in their homes, streets, or anywhere else. The FLSA states that an outside commission-only employee is eligible for minimum wage and overtime pay if they work fewer than 40 hours per week.
In the Sunshine State, there are policies and rules that guarantee a certain degree of protection for commission-only workers who are not employees and are paid entirely or partially by commissions.
When a person hires a sales representative to sell products or provide services, the contract is expected to be in written form and must specifically say how the commission will be determined and paid. The hiring party must also provide the employee with a copy of the agreement.
Failure to Pay Required Wages to Commissioned Employees
The major issue in Florida is that some employers most times classify commission-only employees as exempt in every payroll period, regardless of whether an exemption adheres.
To assess if an employee is exempt during a pay period, the employee’s total earnings will have to be divided by the average hours worked during the payroll period. Note that the worker is not considered exempt in that payroll period if the outcome is less than one and a half times the minimum wage of the state.
Many employers in the state are known to pay commission as required during each payroll period, irrespective of whether the expected commission is lower than the minimum wage for the worked hours during the payroll period. When this occurs, the employee is restrained from obtaining the FLSA’s minimum wage.
As it was noted above, the statutes and regulations governing minimum wage, commission, and overtime pay in the state of Florida are complex. However, employers who break the law can face penalties including fines. Employees are entitled to lost wages and legal remedies in civil court.