Commission Wages in Oregon

Oregon classifies commissions as wages, meaning most wage laws apply

The commissions that an employer pays its employees to perform work, or sell something, are wages. The fact that commissions are wages is important because this allows the employee significant protections and benefits under Oregon’s wage laws. Examples of commissioned employees are extremely varied, for instance: mortgage brokers, sales persons (salesman or saleswoman), auto sales, software sales, computer sales, and many others.  However, commissions can, under certain circumstances, put slight twists on the same wage laws. Further, some of the wage laws were modified for specific groups of commissioned employees.  

Oregon minimum wage generally applies to commissioned employees

The payment of commissions, by itself, is irrelevant to whether the employee is entitled to minimum wage. The general rule is that all employees, including commissioned employees are entitled to minimum wage. There are exceptions to the general rule that all commissioned employees are due minimum wage. These exceptions are called exemptions. If a commissioned employee performs duty that the law has determined is exempt from minimum wage, then that commissioned employee is not entitled to minimum wage. An example of a commissioned minimum wage employee is an outside sales person. To meet this exemption, the trial court must find that the employee’s primary duty is making sales and is customarily and regularly engaged away from the employer’s place of business. Like with all exemptions, there are lots of rules and determinations setting out the meaning of these terms and the exemption.

Federal minimum wage, FLSA, also generally applies to commissioned employees

The Fair Labor Standards Act, known as the FLSA for short, also generally requires commissioned employees be paid minimum wage. While there are lots of similarities between Oregon’s minimum wage and the FLSA, there are some notable differences. Three major differences between the two minimum wage laws that can affect the decision which set of laws the commissioned employee should rely upon are:

1. Oregon’s minimum wage rate is higher than the FLSA. Since Oregon’s rate fluctuates yearly, and by work location, compare Portland, Oregon’s July 2018 rate of $12.00 per hour to the FLSA’s minimum wage rate of $7.25.
2. Oregon has a minimum wage civil penalty of up to 30 days of wages when an employer willfully fails to pay a commissioned employee minimum wage.  Compare this to the FLSA where the commission employee is preemptively entitled to a matching amount of the unpaid minimum wages as liquidated damages.
3. Oregon vs Federal minimum wage also effects what courts hear the minimum wage claim. If you plead an FLSA claim, the federal courts automatically have jurisdiction over your claims. Even if the commissioned employee files their FLSA minimum wage claim in state court, an employer can move the case to federal court.

Experienced lawyers, like those as Schuck Law, can help commissioned employees navigate these choices. There are valid reasons to choose each law depending upon the situation, evidence available, and amount of unpaid wages due.

Oregon overtime laws can apply to commissioned employees

Commission employees may also be entitled to overtime wages under Oregon’s overtime laws. Like with minimum wage, the general rule is that all commissioned employees are entitled to overtime wages. Overtime wages are defined as 1 1/2 times the employee’s regular rate of pay for each hour where the commissioned employee worked in excess of 40 hours in a single workweek. However, even more exemptions exist regarding commissioned employees and overtime wages. For instance, computer professionals who are paid a sufficiently high hourly rate, some retail sales associates, and truck drivers. If the standards of these or another exemption applies, then the commissioned employee is not entitled to overtime wages. However, if no exemption applies and the commissioned employee is due overtime wages.

FLSA overtime laws can apply to commissioned employees

Commission employees may also be entitled to overtime wages under the FLSA. Similar to the Oregon overtime laws, the general rule is that all commissioned employees are entitled to overtime wages. Also like Oregon’s overtime laws, the FLSA overtime laws also have additional exemptions. For instance, agricultural employees who perform only agricultural work can be exempt. If the standards of these or another exemption applies, then the commissioned employee is not entitled to overtime wages. There are a few major differences between Oregon overtime and FLSA overtime laws that may apply to commissioned employees. One is in the damages. Oregon offers a potential civil penalty equal to 30 days of wages. Whereas the FLSA offers a matching amount of the unpaid overtime wages as liquidated damages. Another difference between Oregon’s overtime and the FLSA’s overtime laws regards how the overtime wages are calculated. Under the FLSA, all remuneration (pay) for the pay period is piled together and divided by the total number of hours worked. This result is known as the “regular hourly rate,” and used to determine the amount of overtime pay. (Overtime pay is 1.5 times the regular rate of pay). Whereas under state law, some wages are excluded from the calculation of the “regular rate.” For instance, Oregon does not include a bonus in the regular rate, whereas, the FLSA does. This is important because commissioned employees often get bonuses for making specific goals. Under the FLSA, these bonuses likely are included in the regular rate increasing the amount of overtime wages due the commissioned employee. However, under Oregon’s overtime laws, the bonuses likely would not be included and the actual overtime wages may be lower under Oregon law than the FLSA. Schuck Law recently prevailed on a case regarding a fairly similar issue on a bonus called Brunozzi et al v. CCI.  In this case, the Ninth Circuit Court of Appeals clarified that all wages must be included when calculating overtime wage rates (Piece Rate plus Bonus pay plans).

Since commissions are wages, they must be timely paid at the end of employment

Oregon has determined that the term wages includes commissions. While it may seem obvious that commissions are wages, the finding is very important. Under Oregon wage laws, all commissions must be timely paid at the end of employment. This means that all commissions must be paid in the same time as all other wages as required by ORS 652.140. There is a very limited exception, in that where an employer does not have sufficient information to calculate the commission, the commission wages become due when the employer gets the needed information to calculate the commission. Reed v. Curry. When an employer fails to timely pay all commission wages, the commissioned employee is entitled to penalty wages. 

Google By David Schuck