This article is the second part of the discussion of employer’s defense against overtime wage claims based on the commission sales overtime wage exemption, set forth in 18 U.S.C. § 207(i). exemption that allows certain businesses to not pay the employees paid mostly with commissions an overtime premium. Peter Mavrick is a Fort Lauderdale employment lawyer who defends Florida businesses and their owners against lawsuits seeking overtime and other wages.
As discussed in further detail herein, many federal courts have rejected United States Department of Labor regulations interpreting this exemption. The regulations often do not make sense either because they are contradictory or are outdated in light of the modern economy. Many of the regulations were issued before globalization and the transition of the American economy from a manufacturing to a service economy.
Consequently, federal courts have recognized that Department of Labor regulations applying the commission-sales exemption are arbitrary and not deserving deference. Some of the regulations are either contradictory or make no sense. For example, one regulation (29 C.F.R. § 779.319) states that a refrigerator repair shop has a retail concept even if orders are taken over the telephone and work is done in the home, but another regulation (21 C.F.R. 779.317) somehow states that air conditioning contractors do not have a retail concept. These two businesses perform the exact same job, on essentially the same equipment, for the exact same customers and are distinguishable only by the scale and degree of cooling that are provided by the machines being repaired. There is no apparent reason for distinguishing these two businesses. Successful defense of a business when the regulations lack apparent rational basis can lead federal courts to rule in favor of the business despite clear violation of the Department of Labor’s regulation.