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Massachusetts allows commission-only pay, within limits

Under Massachusetts law, employers can pay a sales employee entirely through commissions on the sales made by the salesperson. The more you sell, the more you make. End of story (almost).

The commonwealth has long protected commission-only employees with an important footnote and, this year, it added another. Massachusetts employers and salespeople are still double-checking the terms of their contracts to confirm they follow the laws, old and new.

A guaranteed minimum wage

Perhaps needless to say, commission-only employees don’t always get an hourly wage. They live off the sales they make, so a car or mattress salesperson who moves more (or less) merchandise makes more (or less) money according to some formula, often a simple percentage.

But Massachusetts wants to avoid commission-only being unfair and exploitive. A formula may be so unfair (one percent on every rotary phone) or sales may be so slow (water skis in November, possibly) that a commission-only employee might be staffing the store essentially for free. Nobody in Massachusetts should have to give 40 hours to a business for essentially nothing.

So, Massachusetts employers, by law, guarantee their employee a minimum-wage level of earnings, sales or no sales. If the salesperson’s commission doesn’t add up to minimum wage given the number of hours they work, the employer must make up the difference. If your sales commission came out to the equivalent of one-half minimum wage, the employer must pay you the other half too.

Commission + overtime pay + Sunday pay

Beginning earlier this year, commission-only employees in Massachusetts are also owed time-and-a-half overtime pay (1.5 times their hourly wage) for each hour worked over 40 in a week. The same wage applies for all hours worked on Sunday.

For some, this rule can raise many questions. The answers tend to always be that the rule is as simple as it sounds, and it must be followed. For example, what if the employee has no hourly wage, but instead makes about $10,000 on commission every week? In that case, in addition to their ten-grand commission, they shall be paid one and a half times the minimum wage in their jurisdiction for every hour they work over 40 hours. And the same goes for Sunday.

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