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California Employers No Longer Allowed to Pay Most Sales Employees Purely on Draw and Commission

On February 28, 2017, the California Court of Appeal held, in Vaquero v. Stoneledge Furniture LLC (No. B269657), that a company’s commission plan which paid sales associates a percentage of sales or a guaranteed draw against earned commissions did not properly compensate sales associates for rest breaks and non-productive time–e.g., time spent in meetings,non-sales activities, etc.  The Court held that an employer violates California law even if they pay employees a guaranteed minimum hourly rate as an advance on commissions earned in later pay periods.

The Vaquero court relied on Bluford v. Safeway Stores, Inc. (2013) 216 Cal.App.4th 864. In Bluford, in reaching its conclusion, the court interpreted the language in Wage Order No. 7 to require employers to “separately compensate employees for rest periods where the employer uses an ‘activity based compensation system’ that does not directly compensate for rest periods.” (Id. at 872.)  While Bluford did not involve employees paid on commission, the Vaquero court concluded the law applies with equal force to commissioned employees, employees paid by piece-rate, or any other compensation system that does not separately account for rest breaks and other non-productive time.

If you suspect or believe that your employer’s compensation scheme violates the law, you may be entitled to legal compensation.  Please contact us at 310.789.2145 for a free consultation.

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