Just because a company chooses to pay its employees on a commission-only basis does not mean it is exempt from state and federal minimum wage and overtime requirements. A California insurance company has agreed to pay upwards of $120,000 in back pay after a federal investigation found the company had violated overtime, minimum wage and various other wage-and-hour laws. Premier Insurance Services paid its employees strictly on commissions with employees often being paid less than minimum wage.
The company sells a variety of insurance policies and employees who worked more than 40 hours per week were not paid for overtime pay as required by the Fair Labor Standards Act. The company apparently failed to keep records of employee payrolls but did agree to implement a system to keep track of employees' hours. The company agreed to pay 90 employees in 13 of its California locations back pay totaling close to $120,000. It also must pay $33,000 in civil penalties, according to an announcement from the U.S. Department of Labor.
The report also stated that earlier the Labor Department had discovered an Upland company called Speedlane Insurance Services had committed similar wage and hour violations. That company was required to pay $200,000 in back pay to 96 of its employees. There was no report on whether this company was required to pay any civil penalties in the matter. That company is owned and operated by a relative of the owner of Premier Insurance Services.
Although there are numerous state and federal laws that protect employees from being paid less than the minimum wage as well as overtime pay should they work more than 40 hours per week, employers can and will fail to comply with these laws. If you feel you may have been misclassified as an exempt employee and thus not eligible for overtime pay, consult with an employment law attorney who will review your case and help you determine if you may be owed back pay for overtime or other wage-and-hour violations.
Source: The Press-Enterprise, "WORKPLACE: Insurance firm fined for wage violations," Jack Katzanek, Jan. 10, 2013
Our San Jose, California, law firm handles a wide range of employment law issues, including U.S. Fair Labor Standards Act claims and wage and hour disputes, similar to those discussed in the above post.