Employment Attorneys Serving Northern and Central NJ
Federal and New Jersey law impose rules on employers about how much employees must be paid, when they must be paid , whether they are entitled entitled to time-and-a-half pay for working more than 40 hours in a week, and how tips and gratuities must be handled.
Sales Commission Disputes
One of the most common areas in which we represent employees on wage claims is in connection with unpaid sales commissions. There are no specific laws that require employers to handle commissions in a particular way. Rather, the cases (or case law) that provide guidance on commission issues are simply a matter of contract law. In most cases, there are not individual employment contracts for each sales representative. Instead, there is either a written commission policy that applies to all salespeople or there is a consistent custom or practice as to when employees are entitled to commissions and how those commissions are calculated. The most common issues that come up involve either changes to commission policies or employees’ entitlement to commission when their employment is terminated. Employers are not allowed to change commission policies retroactively. They have to give notice to the employees and change the policy going forward only. Upon termination, the commissions to which the departing employee is entitled depend on the individual agreement with the employee (if there is one), or the corporate policy (if there is one), or the company custom. The key issue upon termination is when the employee becomes entitled to a commission. In some companies, it is when the purchase order is entered; in others, it is when the customer is invoiced; and many companies only pay the commission after the customer pays the invoice. Whatever the method is, an employee who is leaving is only entitled to those commissions that were earned before leaving. Whether the commission is earned is based on whether the required event (entry of purchase order, invoice to customer, or payment by customer) occurred before termination.
Sometimes employers improperly classify employees as “exempt” (or “salaried”) just to avoid paying them overtime. But the law provides specific guidance as to who is not entitled to overtime pay regardless of what individual employers call or how they classify employees. Employees whose actual job duties do not fit into one of the exemptions created under federal or New Jersey law are entitled to one-and-a-half times their regular hourly wage for hours worked in excess of 40 in one week. Both the federal Fair Labor Standards Act and the New Jersey Wage and Hour Law exempt executive, administrative, professional, and outside sales employees. Federal law also exempts certain information technology employees. Both laws provide very specific guidance to determine whether employees fit the definition of any of those exemptions.
Both federal and New Jersey law require employees working on public construction projects to be paid prevailing wages, which are set by the Department of Labor. The term “prevailing wage” refers to hourly wages, benefits, and overtime. Employees working on public construction projects are entitled to be paid prevailing wages regardless of whether they are working directly for the general contractor or for a subcontractor. The amount of wages required to be paid to employees subject to prevailing wage laws is made on a state by state and sometimes county by county basis, depends upon the job classification of the employee, and sometimes, more specifically, the actual work being performed by the employee.
If you are being or have been denied overtime pay, commissions or prevailing wages, call New Jersey’s wage and hour attorneys at Lenzo & Reis, LLC at 973-845-9922.