FLSA: Unpaid Wages, Overtime and Liquidated Damages Awarded to Mortgage Loan Officers Solely Compensated on a Commission Basis; Day-Day Manager of Business Individually Liable to Employees

We are often approached by employees who erroneously assume that just because employees are paid on a commission basis, employees are not entitled to a minimum level of pay or overtime compensation when they work more than 40 hours per week. A recent case, Solis v. A-1 Mortgage Corp., 2013 U.S. Dist. LEXIS 39167 (W. D. Pa. (March 21, 2013) (Conti, J.) illustrates that commissioned employees who work long hours and do not make any money may have several claims against their employer, and in some instances, the owner or operator of the business can be found individually liable. In A-1, the Department of Labor filed an action under the FLSA for failure to pay 21 employees the requisite minimum wage and overtime compensation. After a bankruptcy filing, the only remaining defendant was the sole owner of the business’s husband who was in charge of overseeing day-to-day operations of the mortgage brokerage. In A-1, the mortgage brokerage firm generated sales leads through radio, TV, and Internet advertisements and provided leads to its employee loan officers who were strictly paid on a commission basis and were not guaranteed minimum wage for the hours they worked each week, and not paid overtime.

In finding individual liability against the husband, the Court found that since he had at least some influence over hiring and firing decisions and had significant control over work rules, assignments, and conditions of employment; day-to-day supervision; and employment records; the husband was an employer as a matter of law.

In awarding damages to the commissioned mortgage loan officers, the court noted several basic legal principles commonly applied in all FLSA cases. First, the FLSA requires that every employer shall pay its employees a specified minimum hourly wage. Second, when employees work more than 40 hours per week, they must be paid 1.5 times their regular wage rate (or 1.5 times minimum wage in the case of a commission based employee), unless the job is exempt from overtime pay under law, a difficult test to meet. Third, the FLSA requires employers to “make, keep, and preserve” accurate employment records to ensure that all workers are paid the minimum wage for every hour worked and if the employer does not maintain these records, then an employee’s testimony alone can be sufficient to establish the actual number of hours worked. Also in awarding damages, the court noted that generally an employee can recover 2 years of unpaid wages and overtime unless the employers actions are deemed willful, which means that the employer either knew or showed reckless disregard for whether the conduct in question violated the FLSA; which extends the recovery period to 3 years. In addition, courts typically award FLSA liquidated damages in the form of an additional amount equal to the unpaid wages and overtime which court typically award.

In A-1, the Court awarded the 21 employees unpaid minimum wages and overtime totaling $68,272.11, plus liquidated damages totaling $68,272.11. It is also likely that the Defendant in A-1 will eventually be responsible for paying the Plaintiffs’ attorneys fees and costs as well.

For more information on unpaid overtime, the FLSA and Abramson Employment Law see http://www.job-discrimination.com/lawyer-attorney-1126494.html

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