Summary
The Massachusetts Supreme Judicial Court answered certified questions concerning whether commission-based retail sales employees are entitled to separate and additional overtime and Sunday premium pay under Massachusetts law. The court held that draws and commissions cannot be retroactively allocated or credited toward those statutory premium-pay obligations, even when total compensation meets or exceeds the applicable minimum-wage calculations. It further held that the regular rate for calculating overtime for these employees is at least the minimum wage.
Topics
Practice areas
Questions Presented
- Whether inside sales employees paid entirely through commissions or recoverable draws are entitled to separate and additional overtime compensation when their total weekly compensation equals or exceeds the minimum wage for regular hours and one and one-half times the minimum wage for overtime hours.
- What regular rate applies when calculating overtime compensation for a one-hundred-percent commission inside sales employee.
- Whether inside sales employees are entitled to separate and additional Sunday premium pay when their draws and commissions equal or exceed one and one-half times the minimum wage for Sunday hours.
- Whether draws and commissions may be retroactively allocated or credited against separate overtime or Sunday pay obligations.
Holdings
- Draws and commissions cannot be retroactively allocated as regular hourly wages and overtime compensation. A one-hundred-percent commission inside sales employee is entitled to separate and additional overtime pay even when draws and commissions equal or exceed one and one-half times the minimum wage for overtime hours.
- For a one-hundred-percent commission inside sales employee, the regular rate for purposes of calculating overtime is at least the equivalent of the applicable minimum wage; the overtime rate is one and one-half times the minimum wage.
- A one-hundred-percent commission inside sales employee is entitled to separate and additional Sunday pay at one and one-half times the minimum wage for every hour worked on Sunday, even when draws and commissions equal or exceed that amount.
Key quotations
“We conclude that draws and commissions cannot be retroactively allocated as hourly and overtime wages and Sunday pay even if these draws and commissions equaled or exceeded the minimum wage for the employees' first forty hours of work and one and one-half times the minimum wage for all hours worked over forty hours or on Sunday.” (slip op. at 2)
“Rather, the employees are entitled to separate and additional payments of one and one-half times the minimum wage for every hour the employees worked over forty hours or on Sunday.” (slip op. at 2)
“In short, the regulation entitles the employees to separate and additional overtime payments beyond their draws and commissions.” (slip op. at 17)
Factual background
The plaintiffs worked as retail salespeople for the defendants between 2014 and 2016. They were compensated under a commission-plus-recoverable-draw arrangement, receiving the greater of a $125 daily draw or earned commissions exceeding the draw. The employees worked more than forty hours during at least one workweek and worked on at least one Sunday, but received no additional payments beyond their draws and commissions. Their total compensation nevertheless equaled or exceeded minimum wage for regular hours and one and one-half times minimum wage for overtime or Sunday hours.
Procedural history
The employees filed suit in the Massachusetts Superior Court in September 2017, alleging violations of the Massachusetts Wage Act, overtime statute, and Sunday pay statute. The defendants removed the action to the United States District Court for the District of Massachusetts based on diversity jurisdiction. The federal court certified two questions of first impression to the Supreme Judicial Court.
Remand instructions
The court answered both certified questions in the affirmative and directed that attested copies of the opinion be transmitted to the clerk of the United States District Court for the District of Massachusetts and the parties.