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Ways that commissioned sales jobs can lead to wage violations

On Behalf of | Mar 22, 2024 | Wage & Hour Laws

Commissioned sales jobs in Illinois offer the promise of unlimited earnings potential.

They also come with risks. For example, wage violations can easily occur.

Misclassification as exempt employees

Employers may try to work around wage laws in Illinois by misclassifying commissioned sales employees as exempt from overtime pay. Under state and federal law, employees must meet certain criteria to be exempt. The criteria include performing primarily executive, administrative or professional duties. However, some employers may misclassify sales employees as exempt to avoid paying overtime wages, even though their primary duties may not meet the exemption criteria.

Failure to pay minimum wage

Illinois has a minimum wage requirement. Employers must follow it, even if they pay employees on a commission. Some commissioned sales positions may involve long hours of work with little to no guaranteed base pay. Employers must ensure employees’ total earnings meet or exceed the minimum wage for all hours worked.

Unpaid overtime

Some employers may require sales staff to work beyond 40 hours per week without providing overtime compensation. This practice is illegal under both state and federal law. It can result in significant wage violations.

Chargebacks and clawbacks

In some commissioned sales positions, employers may implement chargeback or clawback policies. Doing so allows employers to deduct commissions if a customer later cancels a sale or gets a refund. Chargeback and clawback policies are not inherently illegal. However, they must follow state wage laws to ensure that they do not leave employees with earnings below minimum wage or without proper compensation for their time and effort.

Employers must ensure compliance with wage laws to uphold fair labor practices for all employees.