The Employment Standards Act (British Columbia) starts from the presumption that employees who get some or all of their pay in commissions are entitled to be paid at least minimum wage for all hours worked, overtime for all overtime hours, and for statutory holidays. Subject to the exemptions and special rules mentioned in a previous post, here are rules on minimum wage for commissioned employees.
The Employment Standards Branch determines whether a commissioned employee has earned minimum wage by dividing the total earnings in a “pay period” by the number of hours worked. A “pay period” cannot be more than 16 consecutive days of employment, so an employee can make more, and even much more, than minimum wage over the longer term, but still claim minimum wage for pay periods when sales are down.
Two ideas to avoid this trap:
- Restructure compensation plans to provide a base salary which meets minimum wage, plus a lower commission rate.
- Have a written agreement to pay an advance each pay period which meets or exceeds minimum wage and which makes the amount by which the advance exceeds actual earnings in that pay period recoverable against commission earnings in excess of the advance in future pay periods.