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Is it legal to lower salesperson’s pay?

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in Compensation and Benefits,Human Resources

Q. We are planning to change a salesperson’s pay from straight salary to a lower salary plus commission. Can we do this without violating wage laws?

A. It depends first on whether the employee is exempt under the wage-and-hour laws. There is an exemption for outside salespersons, which applies if both of these conditions apply:

  1. The employee’s primary duty is making sales or obtaining orders or contracts for services for which a consideration will be paid by the customer.
  2. The employee is customarily and regularly engaged away from the employer’s place or places of business.

If the employee meets this exemption, then there is no issue with prospectively lowering her salary. If the employee is nonexempt, then she must be paid at least the minimum wage. Aside from that, however, you may prospectively lower her salary.

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