The answer depends on their line or work and their pay structure. FLSA regulations do provide an overtime exemption for certain employees of retail and service establishments who are paid on a commission basis. Retail and service establishments are defined as establishments that have a recognized retail concept and where 75% of sales are not goods for resale. Factors relevant to the “retail concept” might include whether the business sells goods or services to the general public or whether the business participates in the manufacturing process.
To qualify for the exemption under Section 7(i):
1. the employee must be employed by a retail or service establishment;
2. the employee’s regular rate of pay must be at least one and one-half times the applicable minimum wage; and
3. more than half the employee’s total earnings in a representative period must consist of commissions.
The representative period cannot be less than 1 month, or more than one year. If all of these these elements are not satisfied, the employee would remain entitled to overtime pay. Because the employer must verify that the regular rate of pay exceeds 1.5x the minimum wage, the employer still needs to track total hours worked during each pay period.
Prior to 2020, the U.S. Department of Labor published lists of businesses that they considered to be retail or non-retail. The new rule withdraws their arbitrary reliance on the lists, allowing more industries to argue for the exemption.