Since our last post on the new overtime rules that will take effect on Dec. 1st, more rules on overtime have been released.  It amends the salary basis test to allow employers to use non-discretionary bonuses and incentive payments (including commissions) to satisfy  the new standard salary threshold ($48,000 per year),  but only up to 10 percent of the total pay.

This is not good news for those U.S. clubs who are paying salary plus commission to your sales manager.  It now basically forces you to guarantee a minimum salary of $48,000 (see the full article for details).  So, our advice, stop paying salaries to supervisory personnel unless their base salary will exceed the $48,000 threshold.  All others should be paid hourly plus incentives with strict limits on overtime so you don’t break the bank. (See out previous post “Learning How To Keep Staff at 40 Hours per Week”).

Sales staff compensation also has overtime implications. If you allow overtime, make sure you are tracking their hours and you are strictly following the inside sales protocols for exemption to the FLSA overtime statutes ( more than 50% of total pay is commission and more than 1.5 times the state minimum wage). It should be noted that you can avoid all this by not allowing overtime.  Call us if you need help with this issue.

Read the full article below for examples and more discussion on the topic. Please call us if you need more information.


Source: Overtime Rule Puts Focus on Incentive Pay