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What Are the Drawbacks of Commission-Based Work?

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Although commission-based work can bring unlimited earning potential, it can be stressful and unstable. It can also cause tension with employers and create employment law disputes.

Wage and Hour Disputes

One common issue with commission-based work involves wage and hour law and the federal minimum wage. When you’re at work, you are entitled to the federal minimum wage of $7.25 per hour or the minimum wage in your state – whichever is higher. Even if you have a slow sales day, you must be paid for the hours you work. If you don’t make minimum wage one day, your employer may claim that your earnings from another day “balance out” your paycheck, but this kind of thinking does not apply if you have too many bad days in a row.

Additionally, determining an hourly rate can be difficult for salespeople and other commission-based earners because they often work independently and set their own schedules. Flexible schedules can also make overtime issues difficult, but unless you are an exempt employee, you need to be paid for all the hours you work – whether you are making commission during this time or not.

Misclassification

Another issue for commission-based employees is misclassification, which can prevent workers from claiming certain benefits and legal protections. For example, an independent salesperson with multiple clients does not have the same rights as a salesperson who works for just one company, so the company in question may misclassify its employees as independent contractors.

While internal salespeople are entitled to the minimum wage, outside salespeople are not, and misclassification can result in underpaid workers, employees without workers’ compensation coverage, and more.

(Wrongful) Termination

Finally, commission-based jobs generally come with less job security because employers will fire employees who are not performing. Nevertheless, your employer cannot fire you due to a protected characteristic or for taking advantage of benefits like workers’ compensation.

To illustrate: your employer can fire you if you do not sell enough product, but they cannot fire you because “women aren’t good salespeople,” because you are pregnant or plan to become pregnant, or because they disagree with your religious beliefs. Similarly, your employer cannot fire you for reporting a hostile work environment or filing a workers’ comp claim if you get injured at work.

Your Rights as a Commission-Based Employee

Whether you work for commission or not, you have the same rights as other employees, including the right to minimum wage and overtime and the right to a safe work environment. Most commission-based employees are also protected by contracts. If your employer underpays you, misclassifies you, subjects you to discriminatory treatment, or violates the terms of your contract, Donati Law, PLLC can help. We’ve been representing people like you for more than 35 years, and every client is a cause we believe in. Our mission is to improve lives and communities, and sometimes legal action is the first step to a lasting solution.

Our logo, the Donati Shield is a symbol of protection. Call us at (901) 209-5500 or contact us online to put that shield in front of your interests today!

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