Overtime Pay Laws for Inside Retail Sales Employees

What are Some Typical Overtime Pay Problems for Inside Retail Sales Employees?

Posted on August 21, 2020 by Rose H. Robbins, Esq.

#1     Hours Worked: Employers must record and pay for all hours worked by employees including any time controlled by the employer, such as time spent “engaged to wait.” Where employees report to work at their scheduled time, the employer must begin counting that as work time. However, if the employer immediately tells the employees that they are not needed, completely relieves them of duty, and gives them a specific report-back time which enables the employees to use the time for their own benefit, this time does not have to be counted as working time. If employees are only told to wait until they are needed, and are not given a specific report-back time that is long enough to use for their own benefit, all of the waiting time is to be counted as hours worked.

#2     Illegal Deductions: Deductions made from employees’ wages for such items as cash or merchandise shortages, required uniforms, and tools of the trade are not legal to the extent that they reduce the wages below the statutory minimum wage or reduce the amount of overtime pay.

#3      Salaried Employees: A salary, by itself, does not exempt employees from the minimum wage or overtime. Whether employees are exempt from minimum wage and overtime depends on their job duties and responsibilities, as well as the salary paid. Often, in retail businesses, salaried employees do not meet all the requirements specified by the regulations to be considered as exempt from overtime pay. The regulations at 29 CFR Part 541 contain a discussion of the requirements for several exemptions under the FLSA including outside salespersons.

#4      Employees Paid on a Straight Commission Basis or Get Commission in Addition to their Regular Hourly or Salary Pay: Unless an exemption applies, commissions need to be included when calculating the regular rate of pay for overtime purposes. Two different overtime pay exemptions may come into play for employees who are paid commission: the commission sales exemption, commonly referred to as the 7(i) exemption; and the outside sales exemption.

Note: The general rule is that inside sales persons who are not otherwise exempt are entitled to minimum wage and overtime pay. Inside sales include the employer’s office and the employee’s home office. A retail establishment is an establishment 75% of whose annual dollar volume of sales is not for resale and is recognized as retail in the particular industry. 29 CFR Part 779. Covered, non-exempt retail establishments are required to pay minimum wage and overtime to covered, non-exempt employees.


The determination of whether you qualify for FLSA minimum wage and overtime pay is best made by an experienced attorney. Call attorney Rose H. Robbins at (954) 946-8130 for a FREE  telephone consultation about your claim for minimum wage or overtime pay violations.

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