HOUSE BILL REPORT
SSB 5569
As Reported By House Committee On:
Commerce & Labor
Title: An act relating to overtime compensation for commissioned salespersons.
Brief Description: Revising provisions for overtime compensation for commissioned salespersons.
Sponsors: Senate Committee on Commerce & Labor (originally sponsored by Senators Schow, Sellar and Wood).
Brief History:
Committee Activity:
Commerce & Labor: 3/27/97, 4/3/97 [DP].
HOUSE COMMITTEE ON COMMERCE & LABOR
Majority Report: Do pass. Signed by 5 members: Representatives McMorris, Chairman; Honeyford, Vice Chairman; Boldt; Clements and Lisk.
Minority Report: Do not pass. Signed by 4 members: Representatives Conway, Ranking Minority Member; Wood, Assistant Ranking Minority Member; Cole and Hatfield.
Staff: Selwyn Walters (786-7117).
Background: Federal and state laws, with exemptions, establish minimum compensation for an employee who works longer than 40 hours per week. In Washington, the overtime provisions are contained in the state Minimum Wage Act, and are administered by the Department of Labor and Industries.
Federal law
Federal overtime law requires an employer to pay an employee who works longer than 40 hours in a week to be compensated at not less than one and one-half times the regular rate at which the employee is employed. An employee of a retail and service establishment who is paid on a commission basis in whole or in part is exempt from the federal overtime law - the Fair Labor Standards Act. Under federal law, an employer of a retail or service establishment employee does not violate the federal overtime law if: (1) the employee=s regular rate of pay is not less than one and one-half times the minimum hourly rate applicable to the employee, and (2) more than half of the employee=s commission for a representative period represents commissions on goods or services. The representative period for determining if enough commissions have been paid maybe as short as one month, but not greater than one year.
A retail and service establishment is an establishment, where 75 percent of whose annual dollar volume of sales of goods or services, or both, are not for resale, and which is recognized as retail sales or services in the particular industry. In addition, more than 25 percent of an establishment=s dollar volume of sales of goods or services must be within the state in which the establishment is located.
Washington law
The overtime provision of the state Minimum Wage Act requires an employer to pay an employee one and one-half times the employee's regular rate of pay for any hours worked in excess of 40 hours in a single work week. The law exempts several categories of employment, but does not refer to employees of a retail or service establishments as exempt from the law=s coverage. Section 130(2)(h) of the Minimum Wage Act provides that the overtime provision does not cover AAny industry in which federal law provides for an overtime payment based on a work week other than 40 hours. However, the provisions of the federal law regarding overtime payment based on a workweek other than 40 hours shall ..... apply to employees covered [under RCW 49.46.130(2)(h)] without regard to the existence of actual federal jurisdiction over the industrial activity of the particular employer within this state.@
The Department of Labor and Industries has determined Section 130(2)(h) of the Minimum Wage Act does not exempt a commission employee of retail and service establishment from the overtime provisions of the state Minimum Wage Act.
Summary of Bill: A new section is added that states the Legislature finds retail commissioned salespersons can maximize their incomes by maximizing their work hours during periods when their sales per hour ratio are high. Employment policies that penalize employers for working retail commissioned sales persons more than 40 hours per week are detrimental to the well-being of retail commissioned salespersons. The state=s Minimum Wage Act was adopted for the purpose of creating conformity between state overtime pay standards and the federal Fair Labor Standards Act, and that alternative federal premium guarantee standards for retail commissioned salespersons were intended to be incorporated into the Minimum Wage Act.
An employer does not violate the overtime provision of the state Minimum Wage Act for employing a retail or service establishment employee longer than 40 hours a week if: (1) the employee=s regular rate of pay is above one and one-half times the minimum hourly rate applicable to the employee, and (2) more than half of the employee=s commission for a representative period, of not less than one month, represents commissions on goods or services.