Earlier this year, a California Court of Appeals held in Vaquero v. Stoneledge Furniture LLC that an employer violated state law by not paying commissioned employees for their rest breaks. Under state law, employees must be provided with paid 10-minute rest breaks for every four hours of work, or fraction thereof. In Vaquero, the employer operated retail stores in which it provided unpaid rest breaks.
Employer’s Commission Plan
Stoneledge Furniture LLC’s (Stoneledge) commission pay plan offered a guaranteed minimum hourly rate of $12.00 per hour for all hours worked. The rate would operate as a draw against commission. If the associate earned commissions above the minimum rate, he or she would receive the amount actually earned. Conversely, if the associate did not earn more in commissions than the hourly rate he or she would never make less than the minimum guaranteed hourly rate.
Two former workers filed a class action suit against Stoneledge alleging that it failed to compensate employees for rest breaks. The trial court ruled in the employer’s favor, finding the pay plan did compensate for rest breaks because they were included in the employees’ hours worked. The Court of Appeal reversed the trial court’s decision holding that authorized rest time must be counted as hours worked with no deduction from wages. Because the company’s pay plan’s minimum rate operated as a draw against commission, it did not properly compensate for rest break time.
If your business employs commissioned salesperson in the state of California, a review of the company’s commission pay plan should be conducted to ensure covered employees are paid at least the minimum wage for rest break time. This pay should not be subject to forfeiture or deduction based on the plan operating as a draw against commission.
Pleasanton Wage and Hour Attorneys
California businesses across the Tri-Valley area rely on the Pleasanton attorneys at Garcia & Gurney, ALC for sound legal advice to help their businesses thrive. This full-service law firm offers expertise and experience through a personable approach. For help with a labor and employment issue or any other business law matter in and around Alameda and Contra Costa Counties, contact us today by calling 925-468-0400.
The information contained in this article is provided by Garcia & Gurney, ALC (“G&G”) and is provided for educational and informational purposes only and should not be construed as legal advice or an offer to perform services on any subject matter. Recipients of this article should not act or refrain from acting on the basis of any information included in this article without seeking appropriate legal advice on the particular facts and circumstances at issue from an attorney licensed in the recipient’s state. G&G expressly disclaims all liability with respect to actions taken or not taken by the recipient based on any or all of the information or other contents in this article. This article not intended to constitute an advertisement for professional services or any other services. Nothing herein is intended to create an attorney-client relationship and shall not be construed as legal advice.
