This post’s inquiry comes from Neil McNulty:
“My thanks to Jeff for his clarification on compensating placement consultants who are employees. I have always been instructed in my 26 years in this business that consultants must be on a fixed base of minimum wage plus commission, or, minimum wage draw against commission…they cannot be 100% straight commission (which most owners would love in order to lower costs), even if the consultants preferred 100% commission. I raised that question because I had an attorney here in VA tell me that as long as the total earnings in commissions, divided by 2,080 (number of working hours in a year), came out to be greater than the minimum wage, we were OK with the law. I told him that we would love that, but that he was incorrect; that for our industry…even if they make $500k in commissions, they still must be receiving either a base of minimum wage, or minimum wage draw against those commissions. Of course, he was not pleased that I questioned his advice because I am not an attorney. Jeff, what are your thoughts on this?
Thanks again, Jeff!”
. . . and thanks to you for giving me the opportunity to save so many search businesses out there.
The federal and state wage-and-hour audits, back pay, penalties, and interest awards can be devastating. Then the government compliance agencies can investigate anything “like or related to a claim.” Meaning everyone else’s compensation. So it’s really not clever to avoid the labor laws.
This reply is nasty, but it’s necessary. So as Grandma Allen would say, “Better a quick pain.” Read well, Fordyce friends…