American Staffing Association (02/23/12) Richard J. Simmons

Both California and federal laws contain overtime pay exemptions for commissioned employees who qualify under the “inside sales” or “commission employees” exemption. On Jan. 24, a California Court of Appeal examined the California state law exemption in Muldrow v. Surrex Solutions Corp. The trial court determined that overtime wages were not owed under California law to a class of recruiters because they were subject to the commissioned employee exemption in California Wage Order 7.

Pursuant to the exemption, employers are not required to pay overtime wages to an employee “whose earnings exceed one and one-half times the minimum wage if more than half of that employee’s compensation represents commissions.” The court of appeal agreed that the recruiters were exempt. An analysis of the ruling was drafted for ASA members by outside counsel Richard J. Simmons, Esq., of Sheppard, Mullin, Richter & Hampton LLP.