Are Employees Paid Solely by Way of Commissions Entitled to Separate Payments for Overtime Work or Work on Sundays Under the Massachusetts Overtime and Sunday Wage Statutes?

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In Sullivan v. Sleepy's LLC, the Massachusetts Supreme Judicial Court (SJC) answered this question in the affirmative. In Sullivan, the SJC considered whether an employer satisfied its obligations to its employees under Massachusetts Overtime and Sunday wage laws, where its employees' wages were comprised entirely of commission (or draws against commission), if their total weekly income met or exceeded one and a half times their regular hourly rate or at least one and a half times the minimum wage for each hour they worked over forty. The Court concluded that those employees were entitled to a separate payment - in addition to their draws or commissions - of one and a half times their regular rate or at least one and a half times minimum wage for every hour they worked over forty. With regard to Sunday pay, the SJC affirmed that a plain reading of that statute requires a separate and distinct time and a half payment for hours worked on a Sunday pay even when an employee received commission payments in the first instance that equaled or exceeded what the employee would be entitled to per the Sunday pay statute.

In reaching its conclusion, the SJC looked to the plain language of the overtime statue, which provides, in pertinent part, that "[s]ums paid as commissions, drawing accounts, bonuses, or other incentive pay based on sales or production, shall be excluded in computing the regular rate and the overtime rate of compensation...".  Additionally, the SJC also agreed that Massachusetts regulations prevent a "retroactive crediting" of commission-based payments to satisfy the premium pay requirements of the Overtime and Sunday wage statutes where, as here, the payments were originally made for a separate and distinct purpose.

The Court noted that the purposes of the statute is, in part, to compensate employees for the burden of a long work week and to encourage employers to hire more employees to make up for the extra hours needed to staff their establishments and pointed out that permitting employers to apply the commission payments they were already making to their employees to satisfy their overtime and Sunday pay requirements would not achieve that purpose.

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