OT, Commissions & Hourly Rates: Making Cents of Route Driver Pay

“OT, Commissions & Hourly Rates:
Making Cents of Route Driver Pay”
Presented by Heather A. Bailey, Esq.
SmithAmundsen LLC
November 13, 2013
10:30am – Noon
NAMA Coffee, Tea & Water Show 2013
Gaylord Opryland Convention Center, Tennessee Ballroom B
By the hour?
With overtime pay?
Commissions only?
Salary only?
Fluctuating Workweek
Trucks 10,001+
GVWR; and affecting
interstate commerce:
◦ Many of your vending
items are shipped
from out of state
vendors or
distributors and do
not “come to rest” in
warehouse; or
◦ Routes cross state
S.D. of FLA case –
NAMA member
fought route driver
on MCE & won!
M.D. of TN case –
NAMA amicus brief in
support of industry
on MCE
Countless DOL audit
& employee demand
letter fights
New Hampshire
New Jersey
New Mexico*
New York
You do NOT need to
pay your route
drivers overtime
You may pay them a
weekly salary for all
hours worked
◦ Be careful of deducting
time from salary!!
You may pay them
based upon a
commission only
You can still choose
to pay OT
Agree to pay $X per
hour (at least
minimum wage)
Depending on state,
pay time and a ½ for
those hours worked
over 40 in a week or
8 in a day
CANNOT combine
weeks to determine
or average out
Note: some states
require double time
Agree to pay driver
based upon % of
Take commissions
for the week, ÷ by
hours worked to
get hourly rate
Take ½ that rate x
overtime hours
For example, a non-exempt
driver earned $1,000 in
weekly commissions and
worked a total of 48 hours in
the week. The employee’s
hourly rate for that week is
$20.83 (1,000 divided by
48). Thus, the operator
needs to compensate this
employee an additional
$83.32 for his overtime
hours ($20.83 divided by 2 =
$10.415 (the half rate)
multiplied by 8 overtime
Collect Sales Monthly?
 One way to compute the driver’s
overtime rate would be to take
the monthly commissions of
$2,000 and multiply that by 12
months in the year ($24,000)
and then divide that by 52 weeks
in the year to give you the
employee’s weekly commissions
of $461.54. Thus, if the
employee worked 48 hours in
one of the weeks that month, his
overtime would be calculated as
follows: $461.54 divided by 48
hours = $9.62 for a regular rate.
Thus, the employee’s additional
overtime compensation would be
$4.81 multiplied by the 8
overtime hours (the hourly rate
$9.62 divided by 2 to get the
half time rate = $4.81).
Alternative to paying
time and a ½ OT
paid for OT
Much like paying
salary but with OT
Must give notice and
best to have
employee agree in
How do we get away
with this?
Agree to pay $X per
week guaranteed
Each week take
salary ÷ the
number of hours
worked to get
hourly rate
Take ½ the hourly
rate x overtime
If a driver makes a fixed salary of $500 per week
and worked 45 hours one week, you divide $500
by 45 hours, which equals $11.11 per hour: the
employee’s rate for that week for straight-time.
You then divide $11.11 by 2 in order to calculate
the half-time for the 5 hours of overtime worked,
which equals $5.56. Thus, you would owe the
employee an additional $5.56 per hour for the 5
hours of worked overtime because he was
already compensated straight-time for those
hours with the fixed salary.
You can pay drivers with a combination of
◦ Salary or hourly plus commission
◦ Commission plus non-discretionary bonuses
◦ Safety awards or like perks
Any pay that driver is entitled to receive for
his work gets included in these “weekly
compensation” for hourly rate determination
◦ Not included: gifts, discretionary/holiday bonuses,
and premium payments added to hourly wages
Individual Wage
Complaint for wages
DOL Audit
Individual Lawsuit for
All can turn into Class
Actions for all drivers
Potential damages:
Back pay
Attorney Fees & Costs
Criminal consequences
Headaches & morale
Determine whether MCE applies or not
If not, determine which method you want to
pay your route drivers OT
◦ If so, determine salary and pay salary each pay period
(few exceptions)
◦ Know when you can and cannot deduct for driver not
working a full workweek
◦ No matter which method, ensure OT is calculated on a
weekly workweek basis and ALL applicable comp is
included when determining hourly rate
Always ensure driver is paid minimum wage
When in doubt, contact L&E counsel
◦ Check payroll system – many have automatic increase
Heather A. Bailey, Esq.
SmithAmundsen LLC
Chicago, IL
(312) 894.3266
[email protected]
member, you are
entitled to 15minutes of free
Labor and
Employment Advice
each quarter!
Just call or email

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