From the moment a prospective buyer walks onto the lot, a salesman is working to get the best deal for the customer, while also making the dealership – and himself – some money. Helping the customer choose the right vehicle, arranging test drives, evaluating a possible trade-in on an existing vehicle, seeking out financing and warranty options, and putting together the long laundry list of papers that need to be signed are just a few of the elements of selling a car.
This is all done so that at the end of the day, the salesman can make a fair commission on the sale of the car.
But what happens when all of that work and those hours spent arranging a sale isn’t properly compensated for? Under the Fair Labor Standards Act, car dealerships are allowed to exempt their salesmen from overtime pay if certain conditions apply. Here are those conditions, as outlined by the U.S. Department of Labor:
- The employee must be employed by a retail or service establishment
- His regular rate of pay must be more than one and one-half times minimum wage for every hour worked over 40 in one week
- More than half the employee’s total earnings in a representative period must consist of commissions
But instead, what often happens is that car salesmen, especially around the holidays, run around helping customers left and right, working late hours and accumulating overtime, but a sale is not made.
In this instance, it is the responsibility of the dealership to compensate the commissioned employee at least minimum wage, and pay his overtime wages. If during the month of December, a car salesman works an average of 50 hours per week, but only makes two $500 sales in that month, the dealership will have to pay him at least minimum wage plus overtime. $1000 divided by four weeks divided by forty hours only works out to be $6.25 per hour – a full dollar less than the current federal minimum wage.
Also, if the dealership is not keeping proper record of the number of hours the employee worked, it could be even worse. In this case, it is best to consult with an experienced Houston overtime attorney to help you evaluate your rights under the FLSA and protect your paycheck.