Selling well is fundamental to your job as a salesperson in the United States. If you fail to bring in many clients or orders, you might fear being dismissed by a company, forcing you back onto the job market.
As the profession can feel unpredictable and competitive, you must familiarize yourself with your legal rights, especially when it comes to employment, commissions, and overtime. Get started by reading this mini guide to a salesperson’s employment rights.
Exempt or Non-Exempt Classifications
Your classification as exempt or non-exempt will determine if you’re legally entitled to minimum wage and overtime in the U.S.
If you typically work outside of your employer’s office, such as performing door-to-door sales, you’re likely exempt from overtime and minimum wage.
However, if you often secure sales at a company’s office desk, you’re likely non-exempt, meaning you’re legally entitled to minimum wage and overtime.
Sales Commission Deductions and Chargebacks
Most salespeople live in fear of a chargeback, which is when a business takes back their commission due to a client canceling a service or a customer returning an order.
If you have non-exempt status, meaning you earn minimum wage, federal law permits chargebacks.
However, some states have stricter rules against chargebacks. For instance, if you’re a salesperson in New York, California, or Illinois, your employer cannot legally perform a chargeback unless there was a specific error in the sale.
The Colorado Wage Act is also quite protective of a salesperson’s commissions. This means that an employer cannot withhold your commission if you’ve adhered to various requirements in your written agreement.
If you’ve worked hard to secure and complete a deal with a client or customer, you have a legal entitlement to the commission earned, even if you have left the company before its payout date.
If an employer fails to pay a sales commission under the terms of your employment agreement, you should consider reaching out to experienced lawyers like Baird Quinn to secure representation for a commission dispute.
It could help you recover money that belongs to you while protecting your finances and future.
Improved Pay Transparency
Many U.S. states, including New York and California, require employers to clearly disclose a company’s commission structure or on-target earnings in job postings.
Also, Colorado’s Equal Pay for Equal Work Act (EPEWA) has made pay transparency a strict legal requirement. This prevents companies of all sizes from hiding pay structures that can affect salespeople’s hard-earned income and commissions.
Companies must now provide a bottom and top number for a salary, such as $50,000-$75,000. Therefore, employers can no longer post “up to $75,000” in a job description.
They must provide in-depth details on how their commission works, such as whether it’s tiered or uncapped. They must also inform whether they offer sign-on, performance, or retention bonuses, as well as other perks.
Every salesperson must familiarize themselves with their employment rights to protect their income and commissions. It ensures they receive every penny they have earned and are legally entitled to, protecting their finances and future.
