How do you calculate the hourly rate paid to commissioned salespersons when exercising their sick leave?
The California Department of Industrial Relations, Division of Labor Standards Enforcement, in its opinion letter of October 11, 2016, answers this question. The preferred method is to calculate all the earnings (hourly, commissions and bonuses) for the prior 90 days before taking sick leave and simply dividing by the total hours worked. Since we are talking about salespersons, the compensation would consist of commissions only. This is pursuant to California Labor Code Section 246(k)(2).
In order to make the calculation, salesperson must’s submit timecards of their hours. Unfortunately, many salespersons don’t submit them, because they are not paid an hourly rate. But you must explain to them such timecards are still required under California law.
Another reason is that salespersons must be paid commissions equaling at least 1 1/2 times the minimum wage. How can you make that calculation unless you have timesheets?
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