Court Says Calif. Commissioned Employees Earn Rest Period Pay

A court ruled on Feb. 28 that rest period pay in California is required for commissioned employees.

Inside sale people affected by this ruling for a separate hourly pay for rest periods include those who work in retail, banks, insurance companies, car agencies, salons, health clubs and other inside sales companies.

Employers Must Abide Decision on Rest Period Pay in California

The California Court of Appeals, 2nd District, ruled that commissioned employees need to be paid separately for rest periods to be in accordance with state law. The ruling extends to those employees who receive a guaranteed minimum hourly rate in the form of an advance on commissions to be earned in later pay periods.

The ruling clarifies that California labor laws for commissioned employees are the same as the laws for other non-exempt employees who are paid for a 10-minute break for every four hours worked, or a major fraction thereof.

Because commissioned employees are paid differently and are not automatically compensated for the rest periods, the California court says these commissioned employees need to receive separate rest period pay in California at their regular rate of pay.

In the past, commissioned employees were considered paid for rest period time because it counted as hours worked without wages being deducted from that time period.

California businesses that are not paying inside sales employees for 10-minute rest periods are in violation of California labor laws.

California Court of Appeals Ruling Sets Standard

The Vaquero v. Stoneledge Furniture LLC ruling involved commission-paid salespeople at the furniture company. To make sure the employees were paid at least $12.01 per hour, the store manager averaged the hours worked (including rest periods) to calculate the not only the amount to be paid for commissions but also the draws against future commissions.

While the initial trial court decided the salespeople were appropriately paid, the appeals court reversed that ruling because the draw on future commissions was not truly separate compensation for rest periods. The court explained the draw “was not compensation at all. At best they were interest-free loans.”

The court determined that the time spent on rest periods was actually not paid time. The relationship between rest period pay in California and money earned through commissions was simply not there.

Protections for Commissioned Employees

In California, employers must pay commissioned salespeople at least minimum wage for all hours worked, including any duties completed outside of sales time, such as mandatory trainings, meetings and paperwork.

Employers also need to reimburse commissioned salespeople for expenses related to the job. These expenses cannot be taken out of commission pay, either. The costs for trainings, seminars, phones, mileage, advertising and business lunches all must be reimbursed.

The employer also must cover any costs associated with transaction errors or customer dispute settlements.

If you work in California at a company that pays you strictly for commissions and you did not receive separate rest period pay in California, you could be eligible to be compensated for this additional pay.

Join a Free California Inside Sales Rest Period Pay Class Action Lawsuit Investigation

If you’re an inside salesperson who works strictly on commission pay, you may have a legal claim if your employer is not paying you additional, separate hourly pay for 10-minute rest periods.

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