California employers are required to authorize and permit employees who are not exempt from overtime (“non-exempt employees”) to take paid rest breaks, during which time they are relieved from work. Generally, employees paid on a commission basis are paid for their productive time, their sales. A recent court decision determined that when non-exempt employees are paid on a commission basis, employers must separately account, and pay, employees for their rest breaks.
In Vaquero v. Stoneledge Furniture LLC, (Cal. Ct. App., Feb. 28, 2017, No. B269657) 2017 WL 770635, the California Court of Appeal looked at a compensation system for employees paid on a commission basis. The employees were guaranteed a minimum weekly salary. When their commissions were insufficient to equal or exceed the minimum weekly salary, they were paid a minimum hourly rate for the shortage that was treated as an advance on future commissions. When commissions exceeded the weekly guarantee, the employer deducted the hourly compensation previously advanced to the employees. The Court of Appeal determined that this was illegal because the employees were not compensated for their rest breaks. Even when the employees were paid a minimum hourly rate, that compensation was taken back when the employees earned enough commissions to repay the hourly wage advance. In other words, the employees were only compensated for their productive time and not for their nonproductive time when they were not making commissions, such as rest breaks. This defeated the purpose of a rest break, which is not to work.
Rest break violations are common wage and hour claims made by employees against employers. Employers who do not pay their employees on an hourly basis should ensure that they do not reduce their employees’ wages for rest breaks by paying employees pursuant to a commission, piece-rate or other compensation system that does not provide compensation for rest breaks. Employers should also ensure employees are paid for other nonproductive time, such as company trainings and meetings.