Category: Wage & Hour

Commissioned Salesperson Agreements

New York Commissioned Salesperson Agreements

New York’s Labor Law requires employers to have written agreements with each commissioned salesperson they employ. Employers who don’t satisfy this requirement could run into serious problems down the road.

Who Is a Commissioned Salesperson?

The New York Labor Law uses the terms “commission salesman,” “commission salesperson,” and “commissioned salesperson” interchangeably. I think the last one sounds best, so I use it here.

The law defines the terms to mean “any employee whose principal activity is the selling of any goods, wares, merchandise, services, real estate, securities, insurance or any article or thing and whose earnings are based in whole or in part on commissions.”

But it specifically excludes employees “whose principal activity is of a supervisory, managerial, executive or administrative nature.”

The New York Labor Law also establishes alternative requirements (not discussed here) for “sales representatives” who are independent contractors rather than employees.

Required Agreements

Employers must have a written agreement with each commissioned salesperson that addresses their compensation.  Both the employer and the commissioned salesperson must sign the agreement. The employer must retain a copy of the agreement for at least three years.

The agreement must include:

  • a description of how to calculate wages, salary, drawing account, commissions, and all other money earned and payable;
  • the frequency of reconciliation for any recoverable draw; and
  • details about payment of compensation earned and payable upon termination of employment by either party.

It is the employer’s burden to ensure that the necessary document is in place. Otherwise, whatever terms the commissioned salesperson says exist will likely become binding.

Payment Frequency

Employers must pay each commissioned salesperson according to the agreed terms of employment.

Generally, this must be at least once per month and by the last day of the month following the month in which the employee earned the compensation. However, if monthly or more frequent payment of wages, salary, drawing accounts, or commissions are substantial, then the employer may pay additional compensation less frequently than once in each month. The employer must always pay at least as soon as required under the compensation agreement.

Upon written request of a commissioned salesperson, an employer must provide a statement of earnings paid or due and unpaid.

Read more about New York’s pay frequency requirements for other categories of employees.

Make Sure You Have Agreements in Place with Each Commissioned Salesperson

Ideally, employers should satisfy these requirements at the time of hire. But you may have employees who change into qualifying roles after they start. Or you might not have put everything in writing. Now is a good time to review your records to make sure you have what you need if there is ever a dispute with a commissioned salesperson over compensation.

Businesses should also periodically review their commissioned salesperson agreements. Do they still reflect the current compensation terms? If not, prepare a new agreement, and get the employee to sign it.

Don’t forget to make sure you’re also complying with the New York Wage Notice Requirements!

New York Pay Frequency

New York Pay Frequency Laws

Do you know how often you must pay your employees? Federal law does not directly address this issue for most employers. But state laws often do. This post describes the most prevalent New York pay frequency requirements for private employers.

New York’s payday laws do not apply to most public (governmental) employers. Many public employees are in unions and have collective bargaining agreements that dictate their pay frequency. While private-sector collective bargaining agreements often also address wage payment issues, they rarely trump state law.

When New York employers must pay employees depends on the nature of the employee’s work. Let’s look at each of the categories.

Manual Workers

New York’s labor law says that employers must pay “manual workers” weekly. More specifically, not later than seven calendar days after the end of the week in which the employee earned the wages.

The law defines “manual worker” to mean “a mechanic, workingman, or laborer.”

There is an exception for all non-profit organizations, who must pay manual workers at least semi-monthly. The New York Commissioner of Labor can also authorize an exception in the case of for-profit companies with at least 1,000 employees in the state, permitting them to pay manual workers no less frequently than semi-monthly.

Commissioned Salespersons

Employers must have a written compensation plan for all “commissioned salesmen” in New York. Then an employer must pay each commissioned salesperson at least once per month, usually by the last day of the month following the month in which they were earned. If there are substantial recurring monthly wages, then the employer need not pay all forms of compensation on a monthly basis. Certain additional compensation can be paid less frequently than monthly, as set forth in the compensation plan.

The law defines “commission salesman” to mean “any employee whose principal activity is the selling of any goods, wares, merchandise, services, real estate, securities, insurance or any article or thing and whose earnings are based in whole or in part on commissions.” This does not include employees whose principal activity is supervisory, managerial, executive, or administrative in nature.

Other Workers

The labor law requires employers to pay “clerical and other workers” not less frequently than semi-monthly. The employer must pay these employees “in accordance with the agreed terms of employment.” It must also designate regular paydays in advance.

The law defines “clerical and other worker” to mean all employees not included as manual workers, commissioned salespersons, or railroad workers. It also does not include employees who work in an qualified executive, administrative or professional capacity who earn more than $900 per week.

There are also special rules for payment of “railroad workers”.

Final Pay Check

When an employee’s employment ends, the employer must pay all wages earned by the next regular payday for the pay period during which the employment ended.

Sometimes the employer cannot determine the final compensation by that time period. For example, commissions or bonuses may depend on ongoing projects. In these cases, the employer must determine when the compensation will be earned and then pay by the applicable payday.

Review Your Pay Practices

Now is a good time to make sure your company is complying with the New York pay frequency rules. While you’re at it, you should also review these related topics especially for New York employers:

Make sure you also sign up for my free email newsletter to receive monthly updates and best practice tips!

Employee Travel Time

Do Employers Have To Pay for Employee Travel Time?

Under the Fair Labor Standards Act (FLSA), employers have to pay minimum wage and overtime based on hours worked. But it’s not always clear what hours worked are. One perplexing question is whether employers have to pay for employee travel time. Let’s try to answer it.

What Is Work Time?

Most FLSA compensation requirements are based on time worked.  Work time is generally any time that an employer “suffers or permits” an employee to work.

Interestingly, the law doesn’t actually tell us what “suffer or permit” means. But it’s clear that time worked goes beyond time that the employer intends the employee to be working. It typically includes any time spent working on the employer’s behalf, with or without permission.

What Isn’t Work Time?

The FLSA does say something about what doesn’t count as work time:

(1) walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform, and

(2) activities which are preliminary to or postliminary to said principal activity or activities,

which occur either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities. For purposes of this subsection, the use of an employer’s vehicle for travel by an employee and activities performed by an employee which are incidental to the use of such vehicle for commuting shall not be considered part of the employee’s principal activities if the use of such a vehicle for travel is within the normal commuting area for the employer’s business or establishment and the use of the employer’s vehicle is subject to an agreement on the part of the employer and the employee or representative of such employee.

What does all of that mean in the context of travel time?

When You Do/Don’t Have To Pay for Employee Travel Time

Standard commuting time to and from work is usually not work time. Travel during the work day as part of the employee’s principal work activity is work time.

However, things get more complicated if the employee travels out of town.

If an employee who normally works at one fixed location travels out of town and returns home the same day, then the extra travel time is work time. But the employer can subtract the normal commuting time.

Overnight out-of-town work travel adds another wrinkle. Then, the general rules are that:

(1) Any time the employee actually spends working is work time (this includes travel time driving a car).

(2) The portion of the day(s) when travel time crosses the employee’s normal work hours is also work time (this includes time as a passenger).

The first of these rules is easy enough to follow/apply/accept. The second is harder. Consider the case of an employee who normally works 9:00 a.m. to 5:00 p.m. When she travels out of town for an overnight stay, the employer has to count any travel time during those hours as work time, even if she isn’t actively working or even driving. And this even includes travel on days of the week that the employee doesn’t normally work, such as weekends.

Employee Travel Time Caveats

These rules pertain to federal minimum wage and overtime requirements for non-exempt employees.

The FLSA does not require employers to pay exempt employees for their travel time.

State wage and hour laws may impose additional requirements.

Please sign up for my email newsletter to receive more helpful updates and reminders designed just for employers!