California Supreme Court Clarifies Inside Sales Exemption: Employment Law Manual Updated

Author: Michael Cardman, XpertHR Legal Editor

To be exempt from California's overtime requirements, inside salespersons must be paid at least one and one-half times the minimum wage (half of which must be derived from commissions) during each pay period, the Supreme Court of California ruled in Peabody v. Time Warner Cable, Inc.

Under the Peabody ruling, an employer will not satisfy the minimum earnings requirement of the inside sales exemption by reassigning wages from a different pay period. An employer may not pay commission wages on a monthly basis and then retroactively attribute them to the weeks of the monthly period in which they were earned.

The Employee Classification: California section of the Employment Law Manual has been updated to reflect this ruling.