Case: Sullivan v. Sleepy’s LLC, 482 Mass. 227 (2019)
Topic: Commission; Draws; Overtime; Sunday Pay; Timely Payment; Class Action; Minimum Wage; Premium Pay
Plaintiff’s Problem: I am an inside sales employee and I am entirely paid in commissions, am I entitled to overtime pay? Am I entitled to Sunday pay?
Plaintiff’s Background: The plaintiff-employees worked as salespeople at retail stores operated by the national furniture store Sleepy’s between 2014-2016. As their daily pay, the employees received the greater of (1) the $125 recoverable draw or (2) earned commissions in excess of $125. On at least one occasion, the employees worked more than 40 hours in a week, and they also worked on at least one Sunday. On these occasions the Sleepy’s did not pay the employees any additional wages beyond the recoverable daily draw and any commissions. On Sept. 11, 2017, the plaintiffs filed a complaint in Superior Court on behalf of themselves and similarly situated Sleepy’s employees, alleging that Sleepy’s failed to pay them for overtime and Sunday hours, in violation of the Massachusetts Wage Act and the statutes governing overtime and Sunday work.
The case was transferred to federal District Court, but the issues presented to the Court were about state law, so the federal court presented the issue the Supreme Judicial Court (SJC) for help.
What The Court Said: Yes. Inside sales employees paid on a 100% commission basis are entitled to pay for overtime hours worked and premium pay for work on Sundays.
The SJC focused on the legislative purposes behind the overtime statute and Sunday wage statute. The SJC has previously described the purpose of the overtime statute as three-fold: “to reduce the number of hours of work, encourage the employment of more persons, and compensate employees for the burden of a long workweek.” Additionally, the Sunday pay statute, provides that "[a]ny store or shop . . . which employs more than a total of seven persons, including the proprietor, on Sunday or any day throughout the week, shall compensate all employees engaged in the work performed on Sunday . . . at a rate not less than one and one-half times the employee's regular rate." Here, the SJC concluded that the $125 daily recoverable draw Sleepy’s paid out to its inside salespeople functioned as a flat rate payment that did not change based on whether the employee worked overtime. According to the Court, by failing to put a premium on overtime work this compensation plan created an incentive for Sleepy’s to require its employees to work overtime, and a disincentive to hire additional employees. In other words, Sleepy’s compensation plan conflicted with the intent of the overtime and Sunday statutes and was not permissible.
Employers may not retroactively apportion commissions or draws for salespeople as overtime or premium pay. Instead, commission-based employees have a right to separate and additional payments for every hour worked over 40 hours in a week, on Sundays, or on designated holidays.
If you are a commissioned sales person and you find yourself in a situation similar to the one discussed here, or you have any questions about whether what your employer is doing is legal, please don't hesitate to reach out to Attorney Phillips at Phillips Garcia today. We handle cases like yours, and we handle them well. Check out our client reviews and our case results to see more proof of the quality of our past work.
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