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Sales staff may be exempt from minimum wage

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in Compensation and Benefits,Human Resources

Q. We are planning to change the pay of one employee from straight salary to a lower salary plus commission. How can we do this without violating wage law? —G.T., South Dakota

A. It depends on whether the employee is a bona fide “outside salesperson.” Outside salespeople are exempt from federal minimum wage and overtime requirements if they meet the following specifications: (1) The purpose of the employment is to make sales. (2) The employee customarily spends time in such work away from the employer's business. (3) The amount of time the employee spends in work that does not fall into the above categories does not exceed 20 percent of the work hours of nonexempt employees.

If the exemption doesn't apply, you must pay the employee at least the minimum wage. If she is on straight commission and doesn't earn enough to meet the minimum wage, you must make up the difference. Also, in this case, commissions must be considered when calculating the worker's regular rate of pay for overtime.

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