Every now and then we are asked whether or not automobile salespersons are entitled to overtime compensation. The U.S. Department of Labor (DOL) answered that question in the affirmative several years ago in an action the DOL brought against Plattner Automotive Group, which operates 11 dealerships in the State of Florida. The Department of Labor determined that the company had violated provisions of the Fair Labor Standards Act (FLSA). One of the points stressed by the DOL in that case was that while there is an overtime exemption for commissioned automobile salespersons, such salespersons must still be paid at least the federal minimum wage for all of the hours that they work.
Typically, automobile salespersons are paid a set "draw" which is based on working forty hours per week at the minimum wage or slightly above the minimum wage. Problems arise if the salesperson either works more than forty hours per week or does not sell any automobiles. The problem is compounded if the salesperson works more than forty hours per week and does not sell any automobiles. The salesperson receives the draw, but does not receive any compensation for work performed over forty hours per week. That would be a violation of the FLSA.
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If you have any questions regarding employment law or how commissions should be handled, please do not hesitate to contact me, Santiago J. Padilla, Esq., either at 800-483-7197, or [email protected]