If you’re paid commissions, you’re entitled to get paid overtime when you work more than 40 hours in a week. That’s what the Massachusetts Supreme Judicial Court ruled last week in a decision called Sullivan v. Sleepy’s LLC

That case involved a claim for unpaid overtime by retail salespeople who were paid on a purely commission basis with a $125 daily draw, but with no additional compensation for overtime.

The salespeople argued that this pay scheme violated the Massachusetts Overtime Law. The employer argued that it did not because the amount of money the salespeople made always equaled or exceeded the amount they would have received if they had been paid 1.5 times the state minimum wage when they worked more than 40 hours per week, or if they’ve worked Sundays.

The Supreme Judicial Court rejected that argument.

The Court held that the Massachusetts Overtime Law requires employers to pay additional compensation for overtime to commissioned employees when they worked more than 40 hours per week.

The Court also held that employers cannot “credit” daily draws or commissions against the overtime pay owed to those employees, and that the overtime rate owed to commissioned employees must be at least 1.5 times the minimum wage. 

This is a significant decision because potentially effects many sales employees in all sorts of industries, such as car dealerships, furniture and home decor sales, direct call marketing, and many other fields that use inside salespeople.

So what does the Sleepy’s decision mean for you? It means that if you are an inside sales representative and you do not receive overtime or Sunday premium pay in addition to your regular pay and commissions, you may be entitled to get overtime.

Bottom line, if you’re paid commissions, you may be entitled to receive overtime pay. If you think you are not getting paid overtime, or have questions or concerns about how you’re getting paid, we’d be happy to talk with you. Contact us today, we are currently handling numerous cases involving these types of issues.