In a recent pro-employer decision, the California Court of Appeals held that California’s exemption from overtime requirements for commissioned employees applied to a car sales consultant and the decision provided flexibility for employers when crafting commission plans. Areso v. Carmax, Inc., 195 Cal. App. 4th 996 (Cal. App. 2d Dist. 2011). In Areso, the plaintiff received a fixed dollar amount for each sale of a car and a percentage of the purchase price for accessories sold. The trial court granted summary judgment for defendant, holding that plaintiff was properly classified as exempt and the Court of Appeal affirmed.
The Carmax decision is significant because it rejects the California Division of Labor Standards Enforcement’s traditional guidance that a commission must be a percentage of the actual sales price. Rather, Carmax holds that compensation under fixed incentive systems, which provide a uniform dollar payment for each product or service sold, may constitute commission wages. For more information on this case and its impact on California wage and hour laws, please see “California Court of Appeal Upholds Applicability of State Commission Exemption to Sales Consultant.”