Q: If one of my California employees doesn’t meet the minimum wage analysis for one week in our pay period, but she still earned commission — do we have to pay her for all the hours she worked plus her commission OR only the hours she worked times the minimum wage?
Do bonuses and spiffs work the same as commissions or are those calculated differently in this scenario?
A: Thanks for your question! We wanted to ensure that we gave you the most precise and accurate interpretation of California’s pay requirements so we double checked our answer with our preferred law firm, FordHarrison.
The minimum wage test, like the overtime exemption test, is tested on a workweek basis. If, the commissions earned or allocated to a workweek plus non-productive time wages, don’t equal or exceed the minimum wage, then the employee will have to be paid the equivalent of the minimum wage for that workweek.
Paying the “equivalent of the minimum wage” will depend heavily on your commission agreement with your employees.
We’ve seen agreements where employees’ commissions depend on whether the commission amounts “earned/allocated” in a workweek exceed the minimum wage rate — if not, this sort of agreement calls for the employer to only pay the minimum wage plus any applicable overtime, and not pay commissions because they’re not considered earned.
As for your question about bonuses and spiffs and whether you can include those amounts when determining whether your employee’s wages exceed the minimum wage, you can, but if your question actually refers to whether your organization must still pay bonuses/spiffs/commissions on top of the minimum wages already going to your employee, that again depends on how your bonus/spiff agreement is worded.
Bottom Line: Check how your bonuses, spiffs, and commissions agreements are worded.