Gov. Charlie Baker Tries Backdoor Theft of Employees’ Earned Overtime Pay
Salespeople work long hours with no guarantee of earning a commission. Massachusetts law has long required that any employee, even commission-only salespeople, be paid overtime if they work more than 40 hours per week. For any hours over 40, a salesperson is entitled to at least Massachusetts minimum wage, multiplied by 1.5 for overtime. This is required under the Massachusetts Wage Act, M.G.L. ch. 151.
Despite this longstanding requirement under the Wage Act, however, many employers have failed or refused to pay overtime to their salespeople. This includes auto dealerships, the furniture business, and other sales-based businesses. Failure to pay overtime clearly harms sales employees. It deprives them of wages that Massachusetts law says they are entitled to.
What some people may not realize, however, is that it also harms employers – employers who are following the law. Yes, some companies know the law and are following it, and are paying employees their just wages. The employers who are not complying are not just violating the Wage Act, they are pocketing their employees’ overtime, creating a climate of unfair competition.
A decision from the Massachusetts Supreme Judicial Court reiterates this. In Sullivan v. Sleepy’s, LLC, 482 Mass. 227 (2019), the SJC held that a furniture store, Sleepy’s, had unlawfully failed to pay its salespeople overtime pay.
Sleepy’s argued that it was permitted to retroactively reallocate employees’ draws and commissions, an argument the SJC rejected, stating as follows:
We reach this conclusion based on the language and purposes of the overtime statute, the regulatory guidance, and our previous case law establishing that, in most circumstances, employers may not retroactively reallocate and credit payments made to fulfill one set of wage obligations against separate and independent obligations.
After this decision, the employers who had broken the law – many of them auto dealerships – obtained a secret provision in Governor Charlie Baker’s 2020 budget bill, Bill H.4067. Budgets are merely supposed to provide funding for the next year’s government. For this reason, budgets do not go through the usual oversight in the Massachusetts State House, such as committee review and testimony from those affected by the law.
Governor Charlie Baker’s secret budget provision would have undone the SJC’s decision in the Sleepy’s case, giving a “get out of jail free” card to employers who violated the law, and, most importantly, taking hard-earned wages out of the pockets of Massachusetts salespeople. It would have taken three years of back overtime wages away from those salespeople.
It is clear that Governor Baker hoped no one would notice this end-run around the legislative process. In the press release he issued trumpeting other aspects of the budget, he was completely silent on provision that would have resulted in retroactive wage theft. Not surprisingly, public records reveal that Governor Baker has received huge amounts of donations from retailers and auto dealerships.
Multiple news outlets eventually found out about Governor Baker’s back-door budget provision, which resulted in a public outcry. In an article by the Boston Globe titled “Governor Baker is working overtime to thwart SJC ruling,” Baker responded that he welcomes “a conversation” about the provision – which is strange, because by keeping it quiet he apparently was intent on not having a conversation about it.
After this outcry, Governor Baker, seemingly embarrassed at the coverage, seems to have removed the offending provision. Given the amount of donations he has received from retailers and auto dealers, and the surreptitious nature of his attempt to introduce the provision in the first place, it is entirely possible that his allies may try to insert it in new legislation in the future.
For the time being, commissioned employees who were not paid overtime are entitled to at least minimum wage, and overtime for all hours that they work in excess of 40 hours. Many employees may be unaware that their rights were violated, however. They may also need to take action to have a court order that their overtime be paid.
If you are a commission-only employee who is concerned that your employer may have violated your rights, contact us at Culik Law today for a no-cost case evaluation to see if we can help you recover stolen wages.