California Employers Must Pay Commissioned Employees for Rest Breaks
Earlier this year, a California Court of Appeals held in Vaquero v. Stoneledge Furniture LLC that an employer violated state law by not paying commissioned employees for their rest breaks.
Employer's Commission PlanUnder state law, employees must be provided with paid 10-minute rest breaks for every four hours of work, or fraction thereof. In Vaquero, the employer operated retail stores in which it provided unpaid rest breaks. Stoneledge Furniture LLC's (Stoneledge) commission pay plan offered a guaranteed minimum hourly rate of $12.00 per hour for all hours worked. The rate would operate as a draw against commission. If the associate earned commissions above the minimum rate, he or she would receive the amount actually earned. Conversely, if the associate did not earn more in commissions than the hourly rate he or she would never make less than the minimum guaranteed hourly rate.
Two former workers filed a class action suit against Stoneledge alleging that it failed to compensate employees for rest breaks. The trial court ruled in the employer's favor, finding the pay plan did compensate for rest breaks because they were included in the employees' hours worked. The Court of Appeal reversed the trial court's decision holding that authorized rest time must be counted as hours worked with no deduction from wages. Because the company's pay plan's minimum rate operated as a draw against commission, it did not properly compensate for rest break time.
Review Your PlanIf your business employs commissioned salesperson in the state of California, a review of the company's commission pay plan should be conducted to ensure covered employees are paid at least the minimum wage for rest break time. This pay should not be subject to forfeiture or deduction based on the plan operating as a draw against commission.