Massachusetts’ Highest Court Holds that Employees Paid on Commissions are Entitled to Overtime and Sunday Pay

Massachusetts law permits employers to pay inside salespeople on a commission only basis, provided that the employer guarantees at least the minimum wage for all regular hours worked. However, according to a recent decision from the Massachusetts Supreme Judicial Court, Sullivan v. Sleepy’s LLC, 482 Mass. 227 (2019), inside sales employees paid on a 100% commission basis are additionally entitled to pay for overtime hours worked and premium pay for work on Sundays. In Sullivan, inside sales employees brought suit seeking additional pay for overtime worked. The employer pushed back, noting that each employee always earned weekly commissions equal to or greater than the minimum wage for each of the first forty-hours worked and one-and-a-half times the minimum wage for each hour over forty. The Court sided with the employees, and rejected the employer’s attempt to retroactively characterize earned commissions as overtime pay. The Court held that the employer’s position conflicted with the purposes of the overtime statute, which includes encouraging the employment of more people, and the compensation of employees for the burden of a long workweek. Massachusetts employers should review their pay practices for commissioned employees in light of the Sullivan decision.