California Labor Guidance
Free plain-English summaries of opinion letters, administrative policies, and interpretive notices from California's labor agency, with the current status and the official source on every page.
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Calculating paid sick leave pay for commissioned and exempt employees
An attorney asked how to calculate paid sick leave pay for an employee paid almost entirely by commission, and separately for an exempt employee who also receives an annual bonus. DLSE explains that a…
Post-termination forfeiture of sales commissions
An employer asked whether it could withhold quarterly sales commissions from employees who weren't currently employed at payout time. The DLSE responded that commissions on sales are wages earned upon…
Commission payments: timing under Labor Code section 204
An employer of mortgage-loan sales staff, paid through biweekly draws plus monthly commissions whose rate depends on total monthly loan volume, asked whether this timing satisfies Labor Code section 2…
Overtime: commission pay plans
An employer of commissioned inside salespersons paid a base salary plus monthly commissions under Wage Order 2 asked about overtime obligations. DLSE explained that these employees don't qualify for t…
Commission calculations
A commissioned coffee salesperson asked about his employer's plan that debited 50% of any invoice unpaid after 90 days from his commission account, and that limited commissions at termination to those…
Salesperson exemption (Orders 4 and 7)
An attorney argued that IWC Order 7's coverage of "commodities" sales didn't extend to insurance agents, and separately questioned whether an insurance agent's pay was really a "commission" as opposed…
Deductions: debiting a manager's pay for staff salary and expenses; debits against insurance-sales commissions
At the request of a superior court judge presiding over a wage dispute, DLSE answered several questions about an insurance company's practice of debiting sales managers' pay. It concluded that debitin…
Payment of commissions upon termination of employment
A law firm asked DLSE when commissions must be paid to a terminated retail employee, and when waiting-time penalties begin and end, where the employer normally calculates and pays monthly commissions …
Piece-rate/commission pay plan with a possible bonus is not a 'regular rate' and must be recomputed for overtime
An attorney submitted a proposed crew-based compensation plan and asked whether its structure satisfied California overtime law. DLSE explained the plan's "possible discretionary bonus" was not truly …
Commissioned-salesperson overtime exemption and bona fide draws/guarantees against commission
A law firm asked DLSE to evaluate several sample commission pay plans for auto-dealership service advisors against the IWC Orders 4 and 9 overtime exemption for commissioned employees, including plans…
Contractual commission-earning conditions can delay payday timing, but earned commissions are still due at termination
An advertising company's counsel asked DLSE whether its outside sales representatives' commission structure — commissions calculated monthly and treated as unearned until full customer payment is rece…
Mixed hourly/piece-rate pay requires a blended regular rate for overtime; a golf instructor's per-lesson fee isn't a true 'commission'
A worker paid a piece-rate for golf lessons and an hourly rate for other time asked DLSE how to calculate the regular rate of pay for overtime purposes. DLSE first clarified that a per-lesson fee base…
A mortgage loan officer can share in a loan's sale gain or loss when that gain/loss is a known part of the commission transaction itself
Counsel for a mortgage lender asked whether it was acceptable under California law for loan officers to share in the gain or loss realized when a closed loan is later sold at a different interest rate…
Commission forfeitures for 'uncollectible' or 'slow paying' customer accounts are illegal; bad debts are a cost of doing business
An employer's counsel described a sales commission plan that forfeited one-third of a commission if a customer account went unpaid past sixty-one days, the full commission past ninety-one days, and ad…
Piece-rate ('brokerage') cleaning-service workers fall under Wage Order 5-89 and get no overtime exemption; regular rate of pay must still be calculated
An employer's counsel described a business that cleans and maintains supermarket grounds and facilities, paying its workers a per-unit "brokerage" rate, and argued the workers fell under Wage Order 4-…
Per-procedure pay to dialysis nurses is piece-rate work, not sales commissions, so it doesn't qualify for the commissioned-employee overtime exemption
Following up on 1984 and 1986 letters that had treated a client's dialysis nurses as commissioned employees exempt from overtime, an attorney asked DLSE to confirm that view still held. DLSE withdrew …
Overtime on commissions paid alongside an hourly wage, and the semi-monthly payday rule for earned commissions
A payroll processor asked DLSE how to calculate overtime for an employee paid an hourly rate plus commissions. DLSE gave a worked example: divide commissions earned in the workweek by hours worked to …
Federal "basic rate" overtime shortcuts for commissioned employees don't apply under California law
An attorney asked DLSE to apply the federal Fair Labor Standards Act's "basic rate" regulations (29 C.F.R. § 548.1 et seq., referencing 29 U.S.C. § 207(i)) to compute overtime for commissioned employe…
Auto-repair "commissions" paid per repair are piece-rate wages, not sales commissions, and can't be withheld past the final-pay deadline
A law firm asked whether its client could keep delaying payment of "commissions" to terminated employees until customer offsets and recall reimbursements were resolved. Citing the recent Keyes Motors …
How to calculate overtime owed on commissions earned on top of an hourly wage
A company officer asked DLSE how to calculate overtime for employees who earn commissions in addition to an hourly wage. DLSE explained the basic method: divide the commissions earned in a workweek by…
Minimum wage as a draw against commissions, and reconciliation timing
An individual asked DLSE about paying minimum wage combined with commissions. DLSE explained that an employee covered by an Industrial Welfare Commission order must be paid at least minimum wage for e…
Computing pro rata vacation pay for salespeople on a draw plus commissions
A trade association's executive director asked DLSE how vacation pay should be computed for salespeople paid a draw plus commissions, following the Suastez decision. DLSE explained that Suastez lets e…
Mechanics paid a 'flat rate hour' are not exempt from overtime as commissioned salespeople
An attorney asked DLSE to reconsider its position on overtime for auto mechanics paid on a "flat rate hour" basis, citing a municipal court decision that treated such mechanics as paid on commission a…
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These are official interpretive documents from California's labor agency: opinion letters answering questions from employers and workers, administrative policies, and interpretive notices. They show how the agency applies wage-and-hour and workplace law to real situations, but they are guidance, not statutes or court decisions, and the agency can supersede or withdraw them. Every page above shows the document's current status, when that status was last verified, and a link to the official source.