Most people performing sales and order-taking duties are compensated with commission in addition to base wages. For this reason, federal and state labor laws treat salespersons differently from many other types of employees.
If you are an inside sales representative in Florida, it is important to understand Fair Labor Standards Act (FLSA) laws that may affect your job and rate of pay. Inside sales means you work at a place of business (or your home office) with primary duties of sales made by phone, over the internet, or by mail.
Under the FLSA, commissioned inside salespeople are usually legally “nonexempt,” meaning they are paid hourly and entitled to minimum wage. Inside sales reps are often considered to be exempt from overtime (defined as 40+ hours worked in a workweek) – but not always. (In contrast, outside sales reps, who primarily work out in the field, are always exempt from minimum wage and overtime laws.)
FLSA, Inside Sales and Overtime Laws
Your employer can legally deny you overtime pay if you work for a retail or service establishment and the following is true:
- Your regular rate of pay, including commissions, is more than 1.5 times the minimum wage (which, in Florida, is currently $8.25 per hour).
- Your commissions make up more than half of your total pay.
If you make less than 1.5 times the minimum wage and your sales commissions are less than half your pay, you may be entitled to overtime. Calculating overtime for commissioned employees can be a little complicated, since the FLSA provides specific, varying formulas. The calculation differs for employees who receive commission only, hourly pay plus commission, or a salary and commission.
Job Misclassification of Sales Reps
Many employers assume it’s fine to classify all commissioned salespersons as “exempt” employees – which is a mistake. In fact, based upon their duties and/or rate of pay, many sales workers are misclassified as exempt and are wrongly denied overtime pay.
Some sales employees may be classified with a creative title, such as “administrator,” which is an exempt employment category. Regardless of what you are called, if your primary duties involve inside sales, you may be entitled to wages you are not receiving.
Collecting Unpaid Wages
If you have been misclassified as exempt from minimum wage or overtime, you may be owed a substantial amount of back pay. If your employer realizes the mistake and changes your classification, you are still entitled to lost pay going back two or three years. There have been numerous individual and class-action lawsuits filed by misclassified sales representatives, including mortgage loan officers and timeshare salespersons.
How the FLSA and Florida Law Protect Pay You’re Owed
When it comes to exemptions and overtime, the state of Florida has embraced FLSA laws without alteration. Claims for unpaid overtime wages must generally be made within two years of the violation. Where the employer has acted “willfully” to deny due wages, Florida’s statute of limitations extends to three years.
Florida provides a state-specific statute regarding salespeople hired as independent contractors. In this case, the terms of payment for commissions should be put in writing, and the contractor should receive a copy of this contract.
If you are an inside sales representative who may have been denied a proper wage, please contact Feldman Williams today.