California Auto Dealer: New Commission Pay Plan Rules

1.California courts liberally construe wage orders to favor employees.

2.Every employer is required by law to compensate employees for rest time.

3.There can be no deduction from wages for rest periods.

4.Employers cannot comply with minimum wage requirements by averaging – i.e. by dividing total pay by total hours worked, rather each hour worked must be compensated at the agreed pay rate.

5.Rest periods require separate compensation.

6.Piece rate plans don’t compensate for rest time.

7.Commission pay plans don’t compensate for rest time.

8.No part of pay for a specific thing (like piece rate work or commission) can be charged against other hours worked.

9.Providing an advance that can be charged against future work is more like an interest-free loan than compensation for work.

Dealers can expect to see new class action lawsuits springing from this case (unless and until it is overturned) by salespeople and service writers, and any other employee whose pay plan formula does specifically account for rest periods.