Free Advice Wednesday: Commissions

I pay my employees based on commissions. Do I still have to pay them minimum wage, even if they don't earn it?


There really aren't any exceptions to the minimum wage laws. And the penalties for violating them can be steep. First of all, you can be sued. Second, you can be held liable for the employee's attorney's fees that he accrues to get that money back. Third, you will also incur "waiting time" penalties, up to a month's worth of wages, for the time the employee went without the minimum.

What's worse is, if the employee was previously "exempt" from overtime, an income level dropping below twice the minimum wage (for full time) will also make that employee non-exempt.

Be careful setting compensation levels. It may not seem fair, but you're better off paying a little more to avoid these pitfalls. Just consider it a form of insurance.