Overtime for Commission-Only Employees

Overtime for commission employees
Commission-only employees have right to overtime pay

On May 8, 2019, the Massachusetts Supreme Judicial Court issued a major decision guaranteeing overtime to employees who are paid on a commission-only basis. The case is Sullivan v. Sleepy’s LLC. The SJC was considering whether salespeople who receive only commissions and a draw and no other salary are eligible for overtime and Sunday premium pay.

The case was brought by salespeople at Sleepy’s, a national chain of mattress stores, who were paid a daily draw of $125 and any sales commissions above that amount. They did not receive any extra pay for working overtime or on Sundays, and they argued that they were eligible for both.

Sleepy’s did not dispute that the overtime statute applied to its salespeople. Instead, it maintained that if you took the salespeople’s take-home pay (again, made up only of the draw and commissions) and divided it by the number of hours they worked, their effective hourly rate was at least the minimum wage for straight time and at least 1.5 times the minimum wage for overtime hours worked. The employees were, in effect, already receiving premium pay as part of their regular pay, according to Sleepy’s argument. The company relied on two opinion letters by the Massachusetts Department of Labor Standards from 2003 and 2009.

This reliance was misplaced, because as the SJC reminded us, the wage and hour laws do not allow employers to “retroactively reallocate and credit payments made to fulfill one set of wage obligations against separate and independent obligations.” In other words, an employer cannot use one wage obligation (to pay commissions) to cover another one (to pay overtime).  

If employers could credit commission and draw payments against their overtime obligations, it would undermine the chief purposes of the overtime law: to discourage long work hours (so that employees can have more personal and family time), to encourage employers to hire more workers (to avoid paying the overtime premium), and to reward employees who do work overtime hours with extra pay. The interpretation of the law advocated by Sleepy’s – whereby it did not have to pay extra money when employees worked overtime – undercut each of these purposes, so the SJC rejected it. 

The SJC’s decision in Sleepy’s will be very important for overtime cases. We have several cases on behalf of employees who are paid on a 100 percent commission basis, must work far more than 40 hours a week, but receive no additional compensation beyond commissions and draws. Those cases will be strengthened by this decision. Feel free to contact us if you work more than 40 hours in some workweeks but only get paid commission, no overtime — or if you work in retail, and work on Sundays, but get paid nothing beyond your commissions.

Case Report: $2 Million Wage Act Class Action Settlement

On January 14, 2019, settlement checks went out to the more than a thousand class members in a class action we brought against a Massachusetts home healthcare company. We were appointed as counsel for a settlement class of home health aides, who we alleged were required to travel between client sites during the workday for no pay, and whose transportation expenses weren’t reimbursed.

The Court’s final order approved a gross settlement fund in the amount of $2 million for the home health aides.

It was a satisfying conclusion to a hard-fought case that began back in February 2017, and we were happy to secure a good result on behalf of these Massachusetts workers.

Feel free to contact us if you have information regarding the failure of a Massachusetts home health care agency to pay for intraday travel time or to reimburse employees for travel-related expenses. Note: this applies to travel during the work day and not to travel between home and work at the beginning or end of the day.related expenses.

Supreme Judicial Court Issues Ruling on Agricultural Overtime Pay

Today the Massachusetts Supreme Judicial Court issued an important decision in favor of agricultural workers. The case is Arias-Villano et al. v. Chang & Sons Enterprises, Inc. which was brought on behalf of workers of a company farming and distributing bean sprouts. The key question in the case was whether the workers were entitled to overtime pay for their overtime hours worked.

While the Superior Court had decided in favor of the defendants, determining that the workers fell under the agricultural exemption and therefore could not receive overtime, the SJC, which was reviewing the case on appeal, overruled this decision.

This agricultural exemption applied to employees “engaged in agriculture and farming on a farm,” and so the key issue here, as SJC’s slip opinion underlined, was “the meaning of the phrase ‘agriculture and farming’”. To answer this question, the SJC turned to the legal definition of these terms, as established by M.G.L. c. 151, § 2: “labor on a farm and the growing and harvesting of agricultural, floricultural and horticultural commodities.”

This definition, the SJC pointed out, “does not include postharvesting activities.” This was essential to the case, because the plaintiffs “were not involved in the growing operations” of the beansprouts, “but instead cleaned, inspected, sorted, weighed, and packaged” them, as well as cleaning the facility and discarding waste. This work, the SJC wrote, “does not fall within the scope of the statute.” And, it pointed out, the history of the minimum wage and overtime statutes indicates that the agricultural exemption was meant to be applied narrowly, as here.

The SJC remanded the case to the Superior Court, granting the plaintiffs’ motion for summary judgment and overruling the grant of the defendants’ motion.

This is a big win for agricultural workers when it comes to wage law in Massachusetts. We are likely to see many more cases brought on behalf of workers like these who were involved in “postharvesting activities” rather than in the literal farming of a crop. The case means that these workers, who worked as many as seventy hours a week, and others like them logging hundreds of hours a month in the agricultural industry, can receive the overtime pay they have earned.

If you are an agricultural worker engaged in “postharvesting activities” who is not being paid overtime rates for your overtime hours worked, feel free to reach out to us.

Case Report: Massachusetts Superior Court Certifies Home Health Aide Class Action

On February 25, 2019, the Massachusetts Superior Court for Suffolk County certified three classes of home health aides in Portillo, et al., v. Compassionate Homecare Inc., et al., Case No. 17-0283A, an unpaid wage class action. Our law firm was appointed as class counsel for the employees.

In our motion for class certification, we argued that the employees had suffered similarly due to three different violations of the Massachusetts Wage Act:

  1. Employees worked more than 40 hours in a workweek and were not paid overtime wages for those overtime hours.
  2. Employees were not paid wages for the time between client appointments during the workday, or reimbursed for transportation expenses.
  3. Employees were not paid for all of their hours worked on the date of their termination.

The defendants opposed the motion, but the judge agreed with the employees and certified an Overtime Class, a Travel Class, and a Lay-Off Class.

If you worked for Compassionate Homecare between January 2011 and the present, or if you are an employee at a different company facing similar issues, feel free to contact us.

Case Report: Wage Act Class Action Settled on Behalf of Home Health Aides

On November 19, 2018, the Massachusetts Superior Court for Suffolk County approved a settlement of a class action we brought against a Massachusetts home care agency. We were appointed as counsel for a settlement class of approximately 1,200 home health aides, who we alleged were required to travel between client sites during the workday for no pay.

The Court’s final order approved a gross settlement fund in the amount of $1.1 million for the home health aides.

This was a long, hard-fought case that began back in the fall of 2015, so we were happy to secure a good result on behalf of these Massachusetts workers.

Feel free to contact us if you have information regarding the failure of a Massachusetts home health care agency to pay for intra-day travel time or to reimburse employees for travel-related expenses. Note: this applies to travel during the work day and not to travel between home and work at the beginning or end of the day.

Overtime Rights for Hotel Workers

Under Massachusetts law, individuals employed “in a hotel, motel, motor court or like establishment” are exempt from overtime, meaning that no matter what the worker does and no matter how many hours they work, they are not entitled to overtime under state law. However, companies here in Massachusetts (and in all other states) must also comply with federal law. The federal Fair Labor Standards Act (“FLSA”) contains no exemption to overtime for hotel and motel workers, and such workers are entitled to overtime premium wages for all hours worked in excess of 40 in a week, provided that they or their employer is covered by the FLSA.

Not all businesses in the United States are covered by the federal FLSA. Some small, local businesses are outside the coverage of the federal law. What is the difference between those businesses that are covered by federal overtime law and those that are not? (In this article I am writing about hotels and motels, so I’ll use those terms, but this same rule applies for other businesses). First, when a hotel or motel has more than $500,000 in annual revenues and has at least two employees engaged in commerce, it is a so-called “enterprise” and all of its employees are entitled to overtime, unless otherwise exempt. If a hotel or motel has multiple has multiple locations, you must add together the revenues from each location to determine if the business as a whole sells more than $500,000 per year.

Even if the hotel or motel is very small and is not an “enterprise,” if an individual worker engages in interstate commerce or produces goods for interstate commerce, that individual will be entitled to overtime pay for work in excess of 40 per week.

If you are a hotel or motel worker not being paid overtime wages for overtime work, feel free to reach out to us, and we will evaluate your case at no charge.