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The Retail Workers Exemption under the Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) establishes employment standards that impact individuals employed in state, federal, and local government. The FLSA covers minimum wage, overtime pay, and record-keeping requirements.

The FLSA requires non-exempt employees to receive overtime pay if they work over forty hours. The rate must be at 150 percent of the employee’s regular rate of pay. Notably, this overtime rate does not apply to employees who work on holidays or weekends, unless they work over 40 hours. However, there are some exceptions to this.

Retail Exemption under the FLSA

The retail sales exemption is a notable exception to the overtime pay requirements established under the FLSA. It allows an employer to pay certain qualifying employees less than minimum wage ($7.25 per hour). An exemption applies when the employee earns an hourly rate of at least 1.5 times the federal minimum wage, the employee earns more than half of their salary in commissions, and the employee works for a service or retail establishment.

To meet the first requirement, the employer must be able to prove that their employee earns more than $10.88 an hour, which is 1.5 times the Texas minimum wage requirement. The next requirement can be complicated because the FLSA does not offer a clear definition of what constitutes “commissions.” It is most important to note that employees who earn commissions based on a regulated number of sales or hours in a week may not meet this exemption. Lastly, the establishment must be a distinct physical place where at least 75% of their dollar volume of sales or goods is not for resale, and the business must be generally recognized as a retail establishment.

Has Your Employer Engaged in Unfair Employment Practices?

If you believe your employer has engaged in unfair employment practices, contact the attorneys at Rob Wiley, P.C. Texas employment laws are complex and require a thorough understanding of various state and federal regulations. Our team of dedicated attorneys has extensive experience handling all types of employment issues. An attorney at our firm can help you understand your rights and potential remedies. Contact us today at (214) 528-6500 to schedule your consultation.

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