Topic:
RETAIL TRADE; WAGES; MINIMUM WAGES;
Location:
MINIMUM WAGE;

OLR Research Report


August 9, 2000

 

2000-R-0811

MINIMUM AND OVERTIME WAGE FOR FURNITURE SALES PEOPLE

 

By: Judith Lohman, Chief Analyst

You asked what Connecticut's minimum and overtime wage requirements are for furniture sales people who are partly compensated by commission. You also asked if auto dealers have the same requirements under Connecticut law and if Rhode Island has any special exemptions in its state wage laws that would apply to a furniture retailer.

SUMMARY

Connecticut wage laws have no exemptions specifically for furniture sales people. But such employees could fall under a special category of employees called “inside sales people,” whose employers are exempted from the overtime wage requirements (but not the minimum wage requirement) if the jobs meet certain standards.

Auto sales people are exempt from overtime wage requirements in Connecticut, as are auto dealership employees who sell maintenance and repair services and auto mechanics if their jobs meet certain standards.

Rhode Island wage laws have no exemptions for either furniture sales people or “inside sales people.” This means that in Rhode Island, all such employees must receive at least the minimum wage and must be paid overtime for work hours over 40 per week.

The federal Fair Labor Standards Act exempts employees of retail or service establishments who work on commission from federal overtime wage requirements if the jobs meet certain conditions. But the conditions are less favorable to employees than the Connecticut requirements so the Connecticut law applies.

CONNECTICUT OVERTIME EXEMPTIONS

Inside Sales People

Under Connecticut's overtime wage law, “inside sales people” whose sole duty is to sell products or services do not have to be paid time and a half for weekly overtime hours if:

1. their regular pay rate is more than twice the state minimum wage (currently $6.15 per hour), or more than $12.30 per hour;

2. more than half their total compensation for a representative period of at least one month comes from commissions; and

3. they work no more than 54 hours over a work week of seven consecutive days (CGS 31-76i(g)).

In deciding how much of an employee's earnings are from commissions, the law requires all earnings from applying a bona fide commission rate to be included even if the amount exceeds any draw or guarantee.

Auto Dealership Employees

Auto Sales People. Employees who are primarily engaged in selling automobiles are exempt from the state overtime wage law (CGS 31-76i(j)).

Employees Who Sell Maintenance and Repairs. The law also exempts people employed by licensed new car dealers primarily to sell maintenance and repair services if their jobs meet the same criteria as described above for inside sales people (CGS 31-76i(j)).

Mechanics. Finally, the law exempts mechanics who:

1. are primarily employed in servicing motor vehicles or farm implements;

2. are employed by someone whose primary business is retail selling and not manufacturing vehicles;

3. are exempt from federal overtime pay requirements; and

4. have actual weekly earnings that exceed their basic contractual hourly rate for the first 40 hours worked plus one and a half times that rate for all hours over 40.

The “basic contractual hourly rate” is the mechanic's hourly pay excluding any flat, incentive, or other pay (CGS 31-76i(o)).

In practice, mechanics are commonly paid by the job according to rates set by industry manuals. Those rates are based on the number of hours required to complete a job. A mechanic who works faster is still paid the full per-job amount.

FEDERAL OVERTIME EXEMPTION FOR CERTAIN RETAIL EMPLOYEES

The federal Fair Labor Standards Act, which among other things sets minimum overtime wage requirements for all states, exempts employees of retail or service establishments from the overtime wage law if:

1. their regular hourly pay rate is more than one and a half times the federal minimum wage (currently $5.15 per hour), or more than $7.73 per hour, and

2. more than half their total compensation for a representative period of at least one month comes from commissions.

As under Connecticut law, in deciding how much of the employee's earnings come from commissions, federal law requires all earnings from applying a bona fide commission rate to be included even if the amount exceeds any draw or guarantee (29 USCA 207(i)).

Federal law allows states to set stricter overtime wage requirements and Connecticut law does so by requiring that the employees' minimum rate be more than twice the state minimum wage (which itself is $1 higher than the federal minimum) rather than one and a half times the minimum. And state law limits the number of exempt hours to 54 per week rather than allowing an employer to avoid overtime pay for an unlimited number of hours over 40. Since Connecticut law is stricter than federal law in this instance, the state law controls.

JL:eh