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The retail sales environment is filled with a multitude of wage violations. In order to stay within their store’s budgeted number of labor hours, many managers require employees to finish work off-the-clock, punish employees for working overtime, or alter time reports.

Retail Sales Exemption

Employers use exemptions as a method to avoid paying overtime to certain employees. Retail sales employees in Texas are frequently improperly classified as exempt under the retail sales exemption.

Whether or not a retail sales employee is truly exempt depends upon a number of factors. If the employer elects to designate the employee as an exempt, commissioned employee, the following three conditions must be met:

1. The employee must be employed by a retail or service establishment;
2. The employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked (currently this means you must earn at least $10.87 for every hour worked);
3. More than half of the employee’s total earnings in a representative period must consist of commissions.

If all three conditions are not met, the retail sales exemption, Section 7(i), is not applicable and the employee is due overtime compensation.

Watch Out for These Illegal Pay Practices

The following are common pay practices that are observed in the retail sales environment.

• Forcing employees to work off-the-clock – You should always be paid for the time you work. This includes training and seminars as well as regular work time. If an employer requires you to clock out, you are relieved from work related activities. This is critical in determining if you are exempt under the retail sales exemption. In order to determine what your hourly rate would be, you have to know how many hours you are actually working. So, for example, if you spend 5 hours per week as a car salesman hanging up signs and balloons on cars, you should include those hours when determining if your effective hourly rate is at least $10.86. If not, then you are not exempt.
• Maintaining inaccurate records of hours – Employers are required to maintain accurate records of the hours that an employee works each workday and workweek, as well as earnings and wages that the employee is owed in order to determine if the employee meets eligibility requirements. You might be exempt one week, but not in another week.
• Using tips in commission calculations – Tips paid by customers to service employees may NEVER be considered as commissions for the purposes of determining an exemption.
• Adjusting time reports – Some employers alter their employees’ clock-in and clock-out times in order to stay within their labor quota or to prevent paying overtime. Employers are also required by law to pay employees if they work during their lunch period.

If you think you may be improperly classified under the retail sales exemption or feel you have a possible claim due to unpaid commissions or overtime, you need to speak with a Texas payroll attorney immediately.  Contact a Texas wage violation attorney at Kennedy Hodges to schedule your free consultation. We will let you know if you are qualified for overtime, if you have been paid incorrectly and how much you might be owed.

To read about an actual client we have represented please click here.