I got asked a great question the other day by a colleague that made me think a bit, so I thought, what a perfect topic for a blog. So, here’s the question that started it all: Can a Minnesota employer in the service industry pay an employee the greater of: (a) minimum wage for each hour worked; or (b) commissions earned for services rendered during an employee’s shift? Her questioning this practice stems from the thought that the employer is affirmatively stating that, for some hours, $0 is attributed to certain time at work. In this example, let’s use a small employer, a hair salon. The employee is scheduled to work from 8:00 a.m. to 5:00 p.m. and has 3 clients on the books (with 8 total slots for the day). The rest of the day, the employee relies on walk-ins to fill her schedule, does other tasks around the salon to keep busy, or just waits around waiting for someone to walk-in. Some days she may leave to run errands. The employee earns $15/hr. commissions for each hour-long appointment, but credits $0/hr. for time without an appointment.
How Can the Employee Be Paid?
Can the employer pay the employee minimum wage for 8 hours of work ($7.25 x 8 = $58)? Yes, but I know you know that. That’s the easy one. Can the employer just pay the employee for the 3 clients the employee serviced if the employee stayed all 8 hours? No – I know you know that too. As 3 x $15 = $45, the minimum wage requirements have not been met and the employer would have to pay the additional $13 ($58-$45) to get the employee up to minimum wage for all hours worked. A Minnesota employer must pay for all hours worked, including waiting time, on-call time, training time, and any other time the employee is restricted to the employer’s premises. Minn. Rules 5200.0120. If the employee is free to leave during nonscheduled time (but must be able to receive a call to come back for an appointment), the employee is no longer working and need not be paid – so long as there are no restrictions that the employee remain close to the premises.
Can the employer just pay the employee commissions earned for services rendered during the shift?
Continue Reading Don’t Trim Off Too Much! Handling Commissions & Minimum Wage