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Lack of time records voids exemption argument

by on
in Compensation and Benefits,Human Resources

No matter how long it took Tracy Klinedinst to paint a car, he was paid based on a standard industry estimate used by auto repair shops and insurance adjusters. While his hourly rate varied from $12 to $15, Klinedinst claimed that over 18 months he worked 3,000 hours of overtime without being paid.

His employer, Swift Investments Inc., argued that Klinedinst was paid on commission and his pay was never less than 1.5 times the minimum wage, so he was exempt from overtime.

The problem: With no records of how many hours Klinedinst actually worked, the company couldn't prove in court how much he actually received per hour. A federal appeals court refused to dismiss his lawsuit. (Klinedinst v. Swift Investments Inc., No. 00-13092, 11th Cir., 2001)

Advice: To qualify for the commission exemption under the Fair Labor Standards Act, an employee must:

1. Be employed by a retail or service establishment.

2. Receive a regular rate of pay over 1.5 times the minimum wage for every hour worked in a workweek in which overtime hours are worked.

3. Have more than half his total earnings in a representative period consist of commissions.

You can't prove you've met the second condition without keeping good records of the number of hours worked and earnings.

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